Gerresheimer AG Annual Report 2018 · micro pumps, prefillable syringes, injection vials, ampoules,...
Transcript of Gerresheimer AG Annual Report 2018 · micro pumps, prefillable syringes, injection vials, ampoules,...
GERRESHEIMER AG
ANNUAL REPORT 2018
Acquired Sensile Medical, established Advanced Technologies Division
Wealth of innovations in primary glass and plastic packaging as well as in drug delivery devices
New production facilities for plastic pharmaceutical packaging in China, Brazil and the US
Won major contracts for inhalers in Europe and as main supplier of prefillable syringes to heparin producer
Automation measures, decision on new plant for devices and syringes in Eastern Europe as well as closure of facility in Kuessnacht
VISIONGerresheimer will become the leading global partner for enabling solutions that improve health and well-being. Our success is driven by the passion of our people.
GOALS FOR 2018
2018 RESULTS
CHECKLIST
Financial market attractiveness
Financial market attractiveness
Profitable growth
Profitable growth
Leading competitive position
Leading competitive position
Revenues at constant exchange rates, excluding the Advanced Technologies Division, between EUR 1.38bn and EUR 1.4bn
Adjusted EBITDA at constant exchange rates, excluding the Advanced Technologies Division, at approximately EUR 305m depending on how the development work necessary for the large projects secured in 2018 progresses
Realize growth potential operationally
All employees as quality officers
Revenues at constant exchange rates, excluding the Advanced Technologies Division, at EUR 1,393.8m
Adjusted EBITDA at constant exchange rates, excluding the Advanced Techno-logies Division and despite substantially negative energy costs and resin prices, at EUR 307.5m1)
Definition of relevant markets and positioning; backed up four growth drivers with a range of operating measures
Continued in-house employee campaign to enhance quality awareness
Extend value chain
Improve innovations and product mix
Regional expansion
Win new customers
Quality and cost leadership
Long term: Gx ROCE of approximately 15%
Long term: Adjusted EBITDA leverage at 2.5x
Dividend of 20% to 30% of adjusted net income after non-controlling interests
Ensure verifiably sustainable operations
Gx ROCE initially adversely affected by Sensile Medical acquisition, down to 10.7%—long-term target of 15% unchanged
Temporary increase in adjusted EBITDA leverage in 2018 to above 3.0x due to the acquisition of Sensile Medical—long-term target of 2.5x unchanged
Further increase in proposed dividend to EUR 1.15 per share (prior year: EUR 1.10)
Non-financial Group declaration pursuant to the CSR Directive Implementation Act released
1) Excluding the two negative one-off effects of the exemption from electricity network charges and final fair value measurement of the Triveni put option.
OVERALL ASSESSMENT FOR 2018
2 The Management Board of Gerresheimer AG
4 Interview with our Management Board
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28 Report of the Supervisory Board
31 Corporate Governance Report
34 Gerresheimer on the Capital Markets
38 Group Management Report
108 Consolidated Financial Statements
160 Responsibility Statement
161 Independent Auditors’ Report
166 Supervisory Board and Management Board
168 Gerresheimer AG Locations
170 Product Overview by Division
173 Glossary
U3 Financial Calendar/Imprint
K3 Multi-Year Overview
K4 Divisions
CONTENTS
Gerresheimer is a leading global partner to the pharma and healthcare industry. With specialty glass and plastic products, the Company contributes to health and well-being. Gerresheimer has worldwide operations and around 10,000 employees manufacture products in local markets close to its customers. With plants in Europe, North America, South America and Asia, Gerresheimer generates revenues of approximately EUR 1.4bn. Its comprehensive product portfolio includes pharmaceutical packaging and products for safe and simple drug delivery: insulin pens, inhalers, micro pumps, prefillable syringes, injection vials, ampoules, bottles and containers for liquid and solid medicines with closure and safety systems, as well as packaging for the cosmetics industry.
OUR FOUR GROWTH AREAS
VALUE PROPOSITION Sensile Medical acquired
Small-batch production of
prefillable syringes in Wackersdorf
Cosmetic glass decoration capacity
expanded
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PRODUCTS AND INNOVATION Gx® Elite Glass
Gx InnoSafe®
Gx RTF® ClearJect® syringe
Gx RTF® metal-free syringe
Gx® RTF and Gx® ETF Vials
Micro pump for Parkinson’s
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REGIONAL EXPANSION Triveni: full takeover
New production facilities for plastic
packaging in China, the US and Brazil
New production facility for devices
and syringes planned in Eastern Europe
Sales operations in Southeast Asia strengthened
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CUSTOMERS Secured major contracts for
inhalers and syringes
Gx® Solutions for biotech
New internal customer:
Sensile Medical
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2 Gerresheimer AG ANNUAL REPORT 2018OUR MANAGEMENT BOARD
Dietmar Siemssen
Chief Executive Officer (since November 1, 2018), as of March 1, 2019 also responsible for Plastics & Devices and Advanced Technologies
CareerBorn in 1963 / industrial engineering degree / worked at Continental from 1994 to 2011, ultimately heading up the joint venture between Continental and Nisshimbo in Japan / from 2011 to 2018 CEO of international automotive supplier Stabilus / CEO of Gerresheimer AG as of Novem-ber 2018 / currently appointed to the Management Board until October 2021
Rainer Beaujean
Chief Financial Officer
CareerBorn in 1968 / business administration degree / started career at Deutsche Telekom AG / Chief Financial Officer and CEO of T-Online International AG / Chief Financial Officer of Demag Cranes AG / Chief Financial Officer of Elster Group SE / joined Gerresheimer AG Management Board at the end of 2012 / Chief Financial Officer since the beginning of 2013 / Also Speaker of the Management Board from February to October 2018 / currently appointed to the Management Board until April 2019
Dr. Lukas Burkhardt
Management Board member (since January 1, 2018)responsible for Primary Packaging Glass
CareerBorn in 1979 / Masters and PhD in mechanical engineering / started career at Audi AG / managerial positions at Rieter Automotive from 2007 to 2014, including six years in China and India / Chief Operating Officer of Franke Group from 2015 to 2017 / Management Board member of Gerresheimer AG from 2018 / currently appointed to the Management Board until December 2020
Andreas Schütte
Management Board member responsible for Plastics & Devices and Advanced Technologies
CareerBorn in 1962 / engineering degree and MBA / started career at VAW Aluminium AG / member of the Management Board at Hydro Aluminium / Chief Executive Officer of the Siteco Group / joined the Gerresheimer AG Management Board in 2009 / currently appointed to the Management Board until February 2019
From left to right:
3OUR MANAGEMENT BOARD
INTERVIEW WITH OUR MANAGEMENT BOARD
DIETMAR SIEMSSEN, CHIEF EXECUTIVE OFFICER
Gerresheimer AG ANNUAL REPORT 20184
Mr. Siemssen, you stepped up as Chief Executive Officer on November 1, 2018. What are your initial impressions after three months?DIETMAR SIEMSSEN: I am truly impressed with the great number of products, sophisticated production processes and technologies, cleanroom technology and pharmaceutical expertise here at Gerresheimer. All of this is absolutely essential to assuring the superior quality expected of us as an important partner to the pharma and cosmetics industries. At Gerresheimer, we have a strong, very motivated and highly qualified team propel-ling the Company forward each and every day.
Pharmaceuticals and cosmetics aren’t industries you immediately associate with excitement. What is your view?DIETMAR SIEMSSEN: Quite the contrary. Each is a huge, dynamic market in its own right with tremendous growth potential. Together, the relevant segments represent a volume of some EUR 15bn for us. The coming years promise to bring plenty of opportunities our way. Our products and solutions are fundamental to ensuring not only that patients safely receive their daily medication in pristine condition day in, day out, but that it is also easily and reliably administered. What we do goes well beyond merely producing packaging. Our place within and contribution to the rapidly changing healthcare markets will become even more central in the future, opening up a variety of new prospects.
That sounds quite abstract, what exactly do you mean?DIETMAR SIEMSSEN: Let’s take parenteral medica-tions—liquid drugs that must be injected—as an example because they are a good illustration of the development path and of how we have contributed to greater safety and convenience for patients. In the past, patients requi-ring parenterals had to regularly visit a doctor’s practice or hospital as an in- or out-patient to receive their injections. As soon as today’s patients return home after being hospitalized for an operation, they can inject themselves with syringes prefilled with heparin to prevent thrombosis.
Our next source of added value is our innovative needle shield, which prevents needle-prick injuries. Our next- generation products, including those from our new subsidiary Sensile Medical, are even more pioneering. Small, wearable micro pumps that can be programmed to deliver precise doses of medication beneath the skin. And, in the future, digital interfaces will provide patients and doctors with all the relevant data. This is why we all feel very confident that Sensile Medical is a great addition to the corporate family.
RAINER BEAUJEAN: And these aren’t distant promises for the year 2030 but the realities of today and tomor-row. Sensile Medical is developing just such micro pumps and readying them for market launch as part of selected customer projects. To this end, a micro pump—in this instance, for treating Parkinson’s—received its European CE declaration of conformity in fall 2018. Now it’s import-ant that the development team be allowed to focus on continuing their work, while we bring the major projects we have won to market and to customers in our trade-mark quality.
Rainer Beaujean, Chief Financial Officer
INTERVIEW WITH OUR MANAGEMENT BOARD
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INTERVIEW WITH OUR MANAGEMENT BOARD
ANDREAS SCHÜTTE: Sensile Medical is also collabo-rating with Sanofi and Alphabet subsidiary Verily on another project to help diabetes patients. In this way, we are establishing new partnerships that far exceed the traditional supplier relationship that packaging companies have with pharma companies.
RAINER BEAUJEAN: The fact that acquiring Sensile Medical spurred us to create a new third division— Advanced Technologies—also makes it clear how significant this is for us.
DIETMAR SIEMSSEN: In the coming years, Sensile Medical will undoubtedly serve as the cornerstone for many projects of all sizes. We believe our new Advanced Technologies Division will unlock significant growth and market opportunities. After all, intelligent and digitally networked devices will play a major role in tomorrow’s healthcare market.
ANDREAS SCHÜTTE: In addition to our core business of primary pharma packaging, we have for many years enjoyed great success as a contract manufacturer of medical plastic systems, such as insulin pens and inhalers. With Sensile Medical, we are taking things a step further by developing our own products, registering patents, broadening our expertise as well as cooperating with pharma companies in the early stages of drug development and delivering intelligent, forward-looking devices that offer the connectivity required in today’s and tomorrow’s networked world.
That sounds like an exciting future. But what about today’s innovations?DIETMAR SIEMSSEN: That is a very good point. I have found that, here at Gerresheimer, we have a very strong foundation for profitable growth. Our sound plan for 2019, which entails building up further growth impetus in the medium and long term, bears testimony to this. The robust innovation pipeline at Gerresheimer will help us to achieve this.
LUKAS BURKHARDT: When you consider that glass is a thousand-year-old packaging material—valued by civilizations as old as the Romans—it sounds dull and outdated. But that is not true. It is still the best material, especially when it comes to injectable liquid drugs, for safely transporting medication to doctors and patients. Our high-quality pharma jars, injection vials, ampoules and cartridges are a case in point. We have developed a new grade of pharmaceutical glass packaging that we call Elite Glass. Highly break-resistant, extremely durable and free of cosmetic defects, it is produced to strict dimensional specifications and is the product of many years of development and engineering work by our teams. Then there are our easy-to-fill injection vials that are pre- steri lized, packaged and delivered to pharma companies ready for filling.
Dr. Lukas Burkhardt, Management Board member responsible for Primary Packaging Glass
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INTERVIEW WITH OUR MANAGEMENT BOARD
ANDREAS SCHÜTTE: Our prefillable syringes made from high-performance plastics COP and produced in Europe are another example. Not to mention our prefillable glass syringes, which meet the high requirements notably for drugs produced using biotechnology. These are flanked by our many tried-and-tested products, which have proven themselves over the years and yet continue to be refined still further. Two examples of these are plastic pharmaceutical packaging which, thanks to its shape, is especially well suited to online mail orders, and our new child-resistant closures.
How was business in the financial year 2018?LUKAS BURKHARDT: In 2018, our injection vial, ampoule and cartridge business in North America clearly recovered. Molded glass also progressed well, with our cosmetic glass products experiencing especially strong demand.
ANDREAS SCHÜTTE: In the US, plastic vials for prescription drugs did well in 2018, as did plastic pharmaceutical packaging in India and South America. On the European market, plastic products only edged slightly above 2017 levels. Syringe sales were also slightly up on the prior year. Due to the loss of a contract for inhalers in Europe, plastic medical products experienced only marginal growth. As a result, we decided to close the affected plant in Kuessnacht, Switzerland. In contrast, our large inhaler project in the US did very well.
How does that translate into figures for the financial year 2018?RAINER BEAUJEAN: In a nutshell, 2018 was a successful year. We met many of our targets. To give you a few key figures, our
revenues at constant exchange rates increased by 4.3% to EUR 1,406.7m. Organic revenue growth—which excludes Sensile Medical—was 3.4%. Given that market research company IQVIA projected volume growth of only 0.3% for drugs in 2018, we clearly outperformed the market. Our earnings are impressive, too. Despite higher costs of energy and resins of some EUR 6m and an estimated EUR 5m, respectively, and excluding both the measurement of the Triveni option, the effects of the exemption from electricity network charges and Sensile Medical, we achieved adjusted EBITDA at constant exchange rates of EUR 307.5m, thus maintaining it at its strong prior-year level. Adjusted net income after non-controlling interests came to EUR 178.0m, well above the prior-year figure of EUR 127.5m. This primarily reflects changes to tax law in the US.
Andreas Schütte, Management Board member responsible for Plastics & Devices and Advanced Technologies
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INTERVIEW WITH OUR MANAGEMENT BOARD
Return on capital employed and leverage are also key figures for the long-term outlook. Where do we stand on those?RAINER BEAUJEAN: Right on target. Acquiring Sensile Medical has naturally had an impact. As a result of this investment, Gx ROCE was 10.7% compared to 12.9% for 2017. Our long-term goal remains a Gx ROCE of 15%. And our adjusted EBITDA leverage temporarily increased above 3.0x in 2018 as a result of the acqui-sition—which is perfectly normal. In the long term, we are still targeting 2.5x.
DIETMAR SIEMSSEN: Gerresheimer has a very solid, robust financial basis that has been carefully managed over the past years.
The market expects growth. How will Gerresheimer drive growth?RAINER BEAUJEAN: As long as twelve months ago, we identified four growth areas: extending the value chain; products and innovation; regional expansion; growth with existing and new customers. In 2018, we initiated a number of projects and notched up a variety of successes.
ANDREAS SCHÜTTE: The first of three examples is our large inhaler project for the North American market, where production in Peachtree City got off to a good start. As a result, the same customer has awarded us their European inhaler contract—a big win from an existing customer—which is why we are expanding our plant in the Czech Republic. Our syringe experts also did a great job, achieving success with a new customer. For the first time, we secured a large project for prefillable syringes from one of the world’s biggest heparin producers. We are also aware that over the medium to long term, we will require additional European production capacity for products such as
insulin pens, inhalers and syringes. So we are planning to build an additional production facility for devices and syringes in Eastern Europe.
LUKAS BURKHARDT: In the Primary Packaging Glass Division, we are making major inroads with automation, investing in our employees as well as product and process quality. Our cosmetic glass production continues to undergo further development in the shape of additional finishing technologies as well as environmentally friendly and sustainable products containing high proportions of recycled glass.
DIETMAR SIEMSSEN: To spur profitable growth, we are investing intensively in capacities, improved productivity and enhancing our employees’ skills and expertise. Our new large-scale projects and forward growth planning call for substantial investments over the next two years. With this in mind, we are initially increasing investment levels for 2019 and 2020 to about 12% of revenues. Thereafter, they will be tapered back down to roughly 8%, as in previous years. To lay out our guidance for 2019, revenues are expected to be in a range of around
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INTERVIEW WITH OUR MANAGEMENT BOARD
EUR 1.4bn to EUR 1.45bn, against a comparative figure of EUR 1,359.7m for the financial year 2018; adjusted EBITDA at constant exchange rates is anticipated to be approximately EUR 295m (plus or minus EUR 5m), compared with EUR 289.1m excluding a number of one-off effects in the financial year 2018. In subsequent years, we anticipate clearly accelerated growth.
How will shareholders profit?RAINER BEAUJEAN: At the upcoming Annual General Meeting, the Management Board and Supervisory Board will propose raising the dividend by EUR 0.05 to EUR 1.15 per share—the eighth increase in a row. This payout ratio amounts to 20.3% of adjusted net income after non- controlling interests. It is, after all, our firm belief that our shareholders should share in our success.
Mr. Siemssen, what will you be focusing on in the coming months and years?DIETMAR SIEMSSEN: We have a sound plan for 2019. My clear objective is to set Gerresheimer on a sustainable, profitable path to growth. In 2019 and beyond, I will be working together with our entire workforce to this end. The basic roadmap for the Company is in place: Our core business—glass and plastic primary pharmaceutical packaging—will account for the lion’s share of the Company’s success now and in the future. At the same time, we will continue to strive for excellence, sharpen our customer focus and foster our workforce. In addition to our strong core business, we will identify new projects and areas, which will drive sustainable, profitable growth, making Gerresheimer even more successful.
The composition of the Management Board is changing. What will this bring?DIETMAR SIEMSSEN: Yes, two members of the Management Board are regrettably leaving us. Andreas Schütte is stepping down of his own request at the end of February 2019. I will take charge of the Plastics & Devices and Advanced Technologies divisions. Rainer Beaujean has opted not to serve the additional three-year term of office offered to him by the Supervisory Board and will depart at the end of April 2019. I am neverthe-less very optimistic about the future. With Dr. Bernd Metzner joining us at the latest from July 2019, we will have a seasoned CFO in our management team. Following a transition period with a few changes, Bernd Metzner, Lukas Burkhardt and I will act as a strong and stable Management Board. I look forward to joining hands with colleagues and the entire global Gerresheimer team in continuing the Company’s successful develop-ment worldwide.
Many thanks.
The questions were asked by Jens Kürten, Gerresheimer Group Senior Director Communication & Marketing.
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Our primary objective is profitable growth, which is driven by four closely interlinked growth areas. In
parallel, we are, of course, also further expanding our quality and cost leadership positions.
FOUR AREAS FOR PROFITABLE
GROWTH
10 Gerresheimer AG ANNUAL REPORT 2018PROFITABLE GROWTH
OUR FOUR GROWTH AREAS
CUSTOMERS
REGIONAL EXPANSION
VALUE PROPOSITION
PRODUCTS AND
INNOVATION
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There’s no question that when pursuing growth, it is not only essential to be on the lookout for opportunities but also to keep an eye on the horizon—the long-term trajectory. For us, that means continually reassessing, adapting and expanding our value proposition—i.e. our value chain.
VALUEPROPOSITION
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Two significant trends stand out: The pharma industry is increasingly calling for system and all-in solutions rather than individual components. We have those capabilities and are even extending them. Intelligent—and ideally networked—drug delivery devices are also in demand. These, too, preferably as a solution, platform or modular system. By acquiring Sensile Medical in 2018, we have taken an important step forward in this direction. And from within our operating business, too, we are making significant progress in expanding our value chain.
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ADVANCED TECHNOLOGIES—OUR NEW INNOVATION DRIVERBy acquiring the Swiss tech company Sensile Medical in the summer of 2018, we not only supplemented our product range with wearable micro pumps but also paved the way for the Group’s new division, whose name is a byword for progress and innovation: Advanced Technologies Division. The new division pools our development and production of smart drug delivery systems.
Sensile Medical’s innovations build on its proprietary micro pump technology, which is the centerpiece in the infusion devices range. Subject to ongoing development and impro-vement, this pump technology is safeguarded by patents through to the 2030s. Sensile’s liquid-drug delivery systems allow flexible, precise and reliable administration in various indication areas, including self-treatment for diabetes and Parkinson’s.
Alongside this core technology, Sensile Medical has developed additional modules that can be integrated into custom solutions as from a fully modular technology system. In this way, Sensile Medical is able to develop solutions adapted to treatment and patient needs.
At present, there are several projects with global bio-pharma companies at various stages of development. Additional areas of innovation include device connectivity and other digital solutions for the entire care chain.
14 Gerresheimer AG ANNUAL REPORT 2018PROFITABLE GROWTH
SYRINGE INNOVATION LAB—SMALL-BATCH PRODUCTION IN WACKERSDORFLarge orders of prefillable syringes are one aspect of the business but there is increasing demand for customer-specific solutions. Often, these are required for small batches of new medications undergoing clinical trials, and frequently they are also used in the early stages of marketing. This calls for specialized skills, flexibility, quick action as well as the ability to address customers’ unique needs. To this end, we are expanding our innovation center in Wackersdorf (Germany), which had previously focused on developing and industrializing medical plastic systems, to include expertise in prefillable syringes and car-tridges. The main idea is to establish a small-batch production facility directly adjoining the R&D department.
COSMETIC GLASS—DECORATION MAKES ALL THE DIFFERENCEOur cosmetic glass plants in Tettau (Germany) and Momignies (Belgium) are preferred suppliers to several cosmetic compa-nies in Europe, large and small. Expertise in all things glass goes with the territory. But as designs and decorations on cosmetics bottles become ever more elaborate, that alone is not enough, especially as customers prefer complete one-stop solutions. This is why we are expanding our expertise in decorative and finishing technologies with new printing and spray coating facilities, hot stamping, acid etching, labeling equipment, adhesive technologies for various accessories and much more.
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Innovations are drivers for tomorrow’s growth. But before they reach patients, pharmaceutical innovations must be fully developed, tested, certified and validated. Naturally, this also applies to our primary pharma packaging. We have a slew of innovations in the pipeline—some are completely novel, others offer new properties or safety features.
PRODUCTS AND INNOVATION
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Gx INNOSAFE®—PREVENTING NEEDLE-PRICK INJURIESUsed syringes can injure doctors, nurses and medical assistants. The one million needle-prick injuries recorded each year in Europe alone speak for themselves. We are in the process of developing a solution to the problem: Gx InnoSafe®. This integrated, easy-to-use passive safety system not only helps to prevent accidental needle-prick injuries but also ensures that syringes cannot be reused.
Closure cap with ergonomic grip surface
Spring for automatic locking
Flexible needle shield Available in market-standard elastomer
for pharmaceutical applications
Transparent sleevefor optimum control
Collar for a secure connection
to the RTF syringe
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METAL-FREE Gx RTF® SYRINGEDuring the conventional production of prefillable glass syringes, a tungsten pin is used to shape the syringe cone. However, this pin occasionally leaves a metal residue behind. This can nega-tively impact certain biotechnologically manufactured drugs. So prefillable syringes with zero risk of being con-taminated by metals are a must. This is why we have developed a new pro-duction technology that uses a ceramic pin instead. We have filed the patent for this process.
Gx RTF® CLEARJECT® NEEDLE SYRINGESometimes glass is not the ideal material for prefillable syringes. In such cases, COP (cyclic olefin polymer), a premium- grade plastic, is the answer. We have started series production of these high-performance syringes at our site in Pfreimd (Germany). This new product is the first plastic syringe that we have developed and are manufacturing in Germany. It is the perfect solution for many biotechnologically manufactured drugs.
Gx® ELITE VIALSWhile no glass receptacle is perfect, we are getting ever closer to that ideal. When it comes to packaging vital medication, such as cancer drugs, in injection vials, our close-to-perfect Gx® Elite vial is the best choice. The highly break-resistant vials are extremely durable, free of cosmetic defects and produced to strict dimensional specifications. These are key prerequisites for correctly filling and packaging the vials. Gx® Elite vials have already been successfully tested by some of our customers.
Gx® RTF VIALS & Gx® ETF VIALSOur two core competencies—molded glass injection vials and processing ready-to-fill or easy-to-fill glass primary packaging materials—facilitate further processing by the pharmaceuticals industry. Our sterilized, packaged and ready-to-fill injection vials are primed to receive drugs the moment they arrive at pharma companies.
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ECO-FRIENDLY PLASTIC PACKAGING FOR A PERSONAL CARE PRODUCTA major customer recently launched a new shampoo brand that focuses on natural ingredients on the market. In keeping with the brand’s environmental priorities, we developed green packaging to match. Reduced wall thickness lowers both the amount of plastic and the container weight. Thanks to the cube-shaped design and indentation in the base, the containers can be easily stacked, which helps to make transportation more environmentally friendly. In addition, each bottle can be refilled up to three times in hair salons.
DUMA® CONTAINERS—CHILD-RESISTANT AND PERFECT FOR DELIVERING ONLINE PURCHASESSince medication, too, is increasingly ordered online and delivered to customers’ doorsteps, the drugs should ideally fit in a mailbox. Instead of the usual round shape, the Duma® Pocket tablet container is a flat oval, ensuring it slips into most mailboxes. This means it is perfectly suited to door-to-door medication deliveries. Furthermore, the Duma® Standard container is now also available with a plastic, single-component, child-resistant cap.
IRRADIATING PRIMARY PACKAGINGPlastic packaging such as dropper bottles for ophthalmology and rhinology products frequently need to be treated with gamma rays before they can be filled. We now save our customers the trouble by taking care of this additional step.
MICRO PUMP FOR PARKINSON’SThe first product from the new Gerresheimer subsidiary Sensile Medical has reached the European market. A wearable micro pump received CE certification for the European market in September 2018. Used in the treatment of advanced Parkinson’s disease, the micro pump is one of several specific customer projects in various therapeutic areas.
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BERLIN
ANAPOLIS
KUNDLI
EASTERN EUROPE
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REGIONAL EXPANSION
We are already among the leaders in many markets, our products rank among the top three in many regions. But not everywhere or in every region. There are always opportunities for growth. But transforming potential into results calls for a clear game plan. Sometimes it is worth starting out small and being patient while harnessing existing strengths and structures. After all, our customers in the pharma industry are very meticulous and circumspect—as they should be—when it comes to health concerns. As a result, decisions are not made quickly, new partners have to pass muster—especially as regards local production—and prove that they have what it takes to handle major orders.
CHANGZHOU
SINGAPORE
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BERLIN
FROM OHIO TO THE REST OF THE CONTINENTWith our primary glass packaging for injection drugs, we have long been the market leader in the US. The same goes for our plastic packaging for prescription-only tablets which are counted out and bottled by pharmacists. Now we are using our plant in Berlin (Ohio/USA) where the familiar orange tablet tubes are produced to tap into the next business area—high-quality plastic packaging that is filled with medication by pharmaceutical manufacturers. This not only means that production must be carried out in clean-room conditions, but also that specialized tamper-evident seals and specific materials are required. The first line became operational in May 2018. And there is plenty of room for further expansion on site.
A NEW PLANT IN A NEW REGION—GOING FROM STRENGTH TO STRENGTH IN BRAZILFor years, our plastic pharmaceutical packaging has been highly successful in Brazil. So far, production has been centered around Sao Paulo. Now it is time to expand into a second region in this enormous country. Our new plant in Anapolis in the state of Goias started production in 2018. There, we will produce the full range of successful plastic packaging as well as customized solutions such as closures, caps, on-site assembly and decoration. Good news not just for customers in Brazil but throughout the continent.
AN IMPORTANT PIECE OF THE PUZZLE ON THE INDIAN SUBCONTINENT To round out our portfolio, we have acquired the remaining 25% stake in our Indian subsidiary Triveni from the former owners. Triveni successfully produces plastic pharmaceutical packaging for India and export. Moreover, we also have plants manufacturing pharma-ceutical-grade molded glass, injection vials and ampoules in India.
ANAPOLIS
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CHANGZHOU—PLANTING SEEDS IN THE MIDDLE KINGDOMOur plan for China is to pursue the same course as with the Plastic Packaging Business Unit in the US—start out small and take the time to build up local production capacity and expertise. Ultimately, there is no way forward without local production and discerning pharma customers’ on-site certifi-cation and validation. This is why we are taking the time to build a solid foundation for manufacturing plastic pharma-ceutical packaging in Changzhou, a city in China’s fast- growing Jiangsu province. In this way, we can best demonstrate our strengths to local customers. But will it start generating high revenues as early as next year? That is highly unlikely because, after all, patience and meticulousness are just as important to the pharmaceuticals sector in China.
CHANGZHOU
KUNDLI
NEW PLANT IN EASTERN EUROPEIt is evident that we need additional production capacity in Europe for drug delivery devices and ultimately also for prefillable syringes. Our existing facilities are insufficient and their scope for expan-sion is limited. For this reason, we have decided to build a new plant in Eastern Europe in the coming years. The plans are already in full swing.
SINGAPORE—GATEWAY TO SOUTH-EAST ASIAIt is not always necessary to have a local production facility in order to expand into new markets. There is plenty going on outside of China in South-East Asia. Indonesia, Malaysia and the Philippines are attractive regions and fast-growing pharmaceutical markets. To ensure that we can better serve potential local customers, we also make our presence felt beyond the relevant trade shows in Jakarta and other cities: We have established a bridgehead in the shape of a small but high-caliber team in Singapore, which is well versed in our portfolio of glass and plastic packaging for the pharma industry and on the lookout for new clients who need our help in this multifaceted region of South-East Asia.
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SINGAPORE
EASTERN EUROPE
CUSTOMERSNo two customers are alike. Why? Because “customer” may spell
large or small contracts, standard orders or customer-specific requests that call for very special services on our part. Or they may even be so
big that we need to make major investments, such as creating new production capacities in new clean rooms and new facilities. Or
we may also tap into entirely new customer groups. And sometimes even an internal customer may suddenly gain significance.
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25PROFITABLE GROWTH
Gx® SOLUTIONS—INTERDISCIPLINARY EXPERT TEAM FOR SPECIAL REQUIREMENTSMany new, demanding and sensitive medications adminis-tered in liquid form call for a new generation of tailor-made primary pharma packaging. We have pooled our skills in Gx® Solutions, an interdisciplinary team of experts and sales-people. This team specializes in services tailored specifically for biotech drugs provided to small and medium-sized biotech companies.
INHALERS FOR EUROPESadly, many people—around 235 million, according to the latest WHO estimates—suffer from asthma. New drugs and inhalers are being developed for these patients. Our US facility in Peachtree City (Georgia/ USA) already produces such new inhalers for the US market for an international pharma company. Now we have secured a corresponding contract for Europe as well. And we are investing heavily in the requisite production capacities at our Czech plant in Horsovsky Tyn.
26 PROFITABLE GROWTH Gerresheimer AG ANNUAL REPORT 2018
A MAJOR NEW INTERNAL CUSTOMER: SENSILE MEDICALSensile Medical, our newest subsidiary, develops infusion pumps for various therapeutic areas. The company’s core competency is developing the devices—not manufacturing them once they are licensed and ready for series pro-duction. The latter calls for manufacturing partners who can do the job with high quality, flexibility and reliability. Going forward, Business Unit Medical Systems will perform that role for various projects following licensing. After all, that is their specialty, which they already perform very successfully for many similar projects, notably insulin pens and asthma inhalers. The German facility in Pfreimd, in particular, will produce a number of these devices in the coming years. In this case, however, they will not be fulfilling external pharma customers’ orders but those of our subsidiary Sensile Medical.
MULTI-YEAR CONTRACT FOR HEPARIN SYRINGES Another highlight among our new orders in 2018: We have succee-ded for the first time in becoming the main supplier to one of the largest heparin producers. We will be supplying this customer with prefillable syringes under a multi-year contract. For this, too, we will be making signifi-cant investments in our syringe competence center in Buende (Germany).
27PROFITABLE GROWTH
REP ORT OF THE SUPERV I SORY BOARD
› Dr. Axel HerbergChairman of theSupervisory Board
In the financial year 2018, the Supervisory Board devoted considerable
time and attention to the Company’s position and fulfilled its obligations
under the law, the Company’s Articles of Association and the Rules for the
Supervisory Board. Those obligations include consultations on the basis of
prompt, regular and comprehensive information provided by the Manage-
ment Board, involvement of the Supervisory Board in decisions of material
importance for the Company and the necessary supervision of management.
The Supervisory Board ensured that it was informed in detail about the
Company’s business development and financial position, including the risk
situation, risk management and compliance. After thorough examination
and discussion, the Supervisory Board voted in eight meetings on the reports
and proposed resolutions submitted by the Management Board to the extent
required by law, the Company’s Articles of Association and the Rules for the
Management Board. The Supervisory Board also dealt with various changes
in the composition of the Management Board. In addition, the Chairman of
the Supervisory Board was in regular contact with the Management Board
and in particular its respective Chairman or Speaker. He was regularly and
promptly informed by them about important developments and upcoming
decisions.
PERSONNEL CHANGES ON THE SUPERVISORY BOARD AND THE MANAGEMENT BOARD
In the financial year 2018, the Supervisory Board consisted of Dr. Axel Herberg
as Chairman, Francesco Grioli as Deputy Chairman, Andrea Abt, Heike Arndt,
Dr. Karin Dorrepaal, Franz Hartinger, Dr. Peter Noé, Markus Rocholz, Paul
Schilling, Katja Schnitzler, Theodor Stuth and Udo J. Vetter.
Dr. Lukas Burkhardt joined the Management Board effective January 1, 2018.
Dr. Christian Fischer left the Company as Chairman of the Management
Board by mutual consent effective February 5, 2018. At its meeting on
February 5, 2018, the Supervisory Board appointed Chief Financial Officer
Rainer Beaujean as interim Speaker of the Management Board with imme-
diate effect. At its meeting on September 6, 2018, the Supervisory Board
appointed Dietmar Siemssen as a member of the Management Board effective
November 1, 2018 and appointed him as its Chairman as of the same date.
At the same meeting, the Supervisory Board revoked the appointment of
Rainer Beaujean as Speaker of the Management Board effective midnight on
October 31, 2018. Andreas Schütte was also a member of the Company’s
Management Board throughout the financial year 2018.
The contract of service of Andreas Schütte as a member of the Management
Board and his appointment to the Management Board were terminated
early by mutual consent effective midnight on February 28, 2019. Rainer
Beaujean will not be extending his contract of service as a member of the
Management Board beyond April 30, 2019 and will consequently be retiring
from the Management Board. Dr. Bernd Metzner will join the Management
Board at the latest effective July 1, 2019.
MEETINGS AND RESOLUTIONS OF THE SUPERVISORY BOARD
The Supervisory Board met eight times in the year under review. The regular
discussions held by the full Supervisory Board covered the revenue and earn-
ings performance of the Company as a whole and of the individual divisions.
At the Supervisory Board meeting on February 5, 2018, the Supervisory Board
resolved to approve an agreement to be entered into by the Company and
Dr. Christian Fischer concerning the immediate termination of the latter’s
Board of Management position and the termination of his employment,
and appointed Chief Financial Officer Rainer Beaujean as interim Speaker
of the Management Board with immediate effect.
At the Supervisory Board meeting on February 20, 2018, the Annual Financial
Statements and Management Report of Gerresheimer AG, the Consolidated
Financial Statements and the Group Management Report for the financial
year 2017, the proposal for appropriation of retained earnings and the Report
of the Supervisory Board were approved. The Annual Financial Statements
were thereby adopted. At the same meeting, the Supervisory Board adopted
its proposals for resolutions to be put to the Annual General Meeting on
April 25, 2018.
REPORT OF THE SUPERVISORY BOARD
Gerresheimer AG ANNUAL REP ORT 201828
REP ORT OF THE SUPERV I SORY BOARD
At its meeting on April 25, 2018, the Supervisory Board approved an additional
investment project in Europe. In addition, the Management Board presented
Sensile Medical AG to the Supervisory Board as an attractive acquisition target.
The purpose of the Supervisory Board’s meeting on July 9, 2018 was the
in-depth presentation by the Management Board on the acquisition of Sensile
Medical AG after completion of negotiations with the sellers as well as on
the impact of two major contracts won. The Supervisory Board addressed
the resultant changes to the budgeted amounts for capital expenditure,
profitability and revenues for the years 2019 to 2022.
At its meeting on July 11, 2018, the Supervisory Board approved the
acquisition of Sensile Medical AG and its financing as well as the changes
to the budget discussed.
At its meeting on September 6, 2018, the Supervisory Board appointed
Dietmar Siemssen as a member of the Management Board effective Novem-
ber 1, 2018 and appointed him as its Chairman as of the same date. The
Super visory Board also revoked the appointment of Rainer Beaujean as
Speaker of the Management Board effective midnight on October 31, 2018.
The corporate strategy drawn up by the Management Board was another
point of focus of the meeting that afforded considerable time and attention.
At this meeting, the Supervisory Board additionally dealt with the annual
Declaration of Compliance in accordance with section 161 of the German
Stock Corporation Act (Aktiengesetz), the engagement of the auditor for
the financial year 2018, the future usability of loss carryforwards recognized
prior to the establishment of the consolidated tax group and the appointment
of Deloitte GmbH Wirtschaftsprüfungsgesellschaft to review the Company’s
non-financial reporting for the financial year 2018.
On October 10, 2018, the Supervisory Board approved the early termination
of the appointment of Andreas Schütte as a member of the Management
Board and his termination agreement by mutual consent effective midnight
on February 28, 2019.
The main items dealt with at the Supervisory Board meeting on Novem-
ber 22, 2018 were the appointment of Dr. Bernd Metzner as a member of
the Management Board effective no later than July 1, 2019, the Group’s
medium-term planning and the approval of the budget for the financial
year 2019.
With the exception of Andrea Abt and Dr. Karin Dorrepaal, who were each
unable to attend one meeting of the Supervisory Board and gave reasons
for their absence, all members of the Supervisory Board attended all the
meetings of the Supervisory Board in the financial year 2018.
MEETINGS AND RESOLUTIONS OF THE COMMITTEES
To ensure that its duties are performed efficiently, the Supervisory Board
has set up four committees: the Mediation Committee in accordance with
section 27 (3) of the German Codetermination Act (Mitbestimmungsgesetz),
the Presiding Committee, the Audit Committee and the Nomination Com-
mittee. These committees prepare topics for resolution by the full Supervisory
Board and, in certain cases, also have authority to take decisions auto-
nomously. The Mediation Committee and the Presiding Committee each
consist of two shareholder representatives and two employee representatives.
The Audit Committee also has an equal number of shareholder and employee
representatives and comprises six members. The Nomination Committee has
three members and consists solely of shareholder representatives.
The Presiding Committee prepares the Supervisory Board’s personnel-related
decisions, notably the appointment and dismissal of Management Board
members as well as decisions regarding the remuneration of Management
Board members. In place of the Supervisory Board, the Presiding Committee
decides on entering into, amending and terminating the service contracts
of Management Board members, except in the case of remuneration issues
requiring the approval of the full Supervisory Board. During the year under
review, the Presiding Committee met twelve times, on January 30, 2018,
February 20, 2018, April 24, 2018, May 3, 2018, May 7, 2018, May 30, 2018,
August 28, 2018, September 12, 2018, September 27, 2018, October 9,
2018, October 10, 2018 and October 15, 2018, and primarily addressed
the departure of Dr. Christian Fischer from the Management Board and his
successor as Chairman of the Management Board. Other matters were the
departure of Andreas Schütte and Rainer Beaujean from the Management
Board as well as a successor for the Chief Financial Officer position.
The responsibilities of the Audit Committee include in particular prepar-
ing Supervisory Board decisions on the adoption of the Annual Financial
Statements and the approval of the Consolidated Financial Statements as
well as discussing the quarterly financial reports and the half-year financial
report. Additionally, the Audit Committee deals with supervision of the
accounting and accounting process, the effectiveness of the internal control
system, the risk management system, the internal audit system, the audit
of the financial statements and compliance. The Audit Committee is also
responsible for approving the award of non-audit services to the auditor.
The Audit Committee met four times, on February 20, 2018, April 11, 2018,
July 11, 2018 and October 10, 2018. Its discussions focused on the reports
on the audit of the Annual Financial Statements and Consolidated Financial
Statements for the financial year 2017 as well as the quarterly financial
reports and half-year financial report for 2018. The Audit Committee also
dealt with the independence of the auditor and the recommendation to the
Annual General Meeting regarding the election of the auditor, issued the
audit engagement to the auditor for financial year 2018, and defined and
monitored the audit process as well as the areas of emphasis of the audit,
29
REP ORT OF THE SUPERV I SORY BOARD
ANNUAL FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENTS FOR 2018
The Annual Financial Statements and Management Report of Gerresheimer AG
and the Consolidated Financial Statements and Group Management Report
drawn up by the Management Board for the financial year from December 1,
2017 to November 30, 2018 were audited by and received an unqualified
auditor’s opinion from Deloitte GmbH Wirtschaftsprüfungsgesellschaft,
Duesseldorf.
The Annual Financial Statements and Management Report of Gerresheimer AG,
the Consolidated Financial Statements, the Group Management Report, the
proposal for appropriation of retained earnings and the auditor’s reports for
the financial year 2018 were made available to the Supervisory Board for
examination. The Audit Committee discussed and examined the documents
in detail at its meeting on February 12, 2019 and issued recommendations
on resolutions to the Supervisory Board. The latter examined the Annual
Financial Statements and Management Report of Gerresheimer AG, the
Consolidated Financial Statements, the Group Management Report, the
proposal for appropriation of retained earnings and the auditor’s reports on
these at the Supervisory Board meeting on February 13, 2019. The auditor
attended the meetings of the Audit Committee and the Supervisory Board,
reported on the conduct and main findings of the audit and was available
to answer questions.
On completion of the examination by the Audit Committee and on comple-
tion of its own examination, the Supervisory Board approved the auditor’s
findings and declared that no objections were to be raised. The Super-
visory Board adopted the Annual Financial Statements and approved the
Consolidated Financial Statements. The Supervisory Board concurs with
the Management Board’s proposal for appropriation of retained earnings.
The Supervisory Board thanks the Management Board and all employees of
the Gerresheimer Group for their contribution to the Gerresheimer Group’s
successful performance in the financial year 2018.
Duesseldorf, February 13, 2019
Dr. Axel Herberg
Chairman of the Supervisory Board
including the agreement on the audit fee. Further topics of consultation were
the preparation and conduct of a tendering procedure for audit services for
the financial year 2019, the future usability of loss carryforwards recognized
prior to the establishment of the consolidated tax group, the effectiveness
of the internal audit system, the risk management system and compliance
at Gerresheimer.
The Nomination Committee recommends suitable candidates to the Super-
visory Board for the proposed resolutions the latter puts to the Annual
General Meeting for the election of Supervisory Board members as share-
holder representatives. It did not meet in the financial year under review.
Likewise, the Mediation Committee did not meet during the past financial
year.
In the financial year 2018, Francesco Grioli was unable to attend one meeting
of the Audit Committee and gave reasons for his absence. Markus Rocholz
was unable to attend meetings of the Presiding Committee once, and Udo
J. Vetter twice, and both gave reasons for their absence. In other respects,
all committee members attended all meetings of the Supervisory Board
committees in the financial year 2018.
CORPORATE GOVERNANCE
The Supervisory Board continuously monitored the development of corporate
governance standards. The Company’s Management Board and Super-
visory Board report on corporate governance in the Gerresheimer Group
on pages 31 to 33 of the Annual Report. On September 6, 2018, the Man-
agement Board and Supervisory Board submitted the annual Declaration of
Compliance in accordance with section 161 of the German Stock Corporation
Act (Aktiengesetz) and made it permanently available to shareholders on
the Company’s website.
CONFLICTS OF INTEREST
Under number 5.5.2 of the German Corporate Governance Code, members
of the Supervisory Board are required to disclose any conflicts of interest to
the Supervisory Board. No conflicts of interest arose in the financial year 2018.
Gerresheimer AG ANNUAL REP ORT 201830
CORP OR ATE GOVERNANCE REP ORT
Gerresheimer AG identifies with the objectives of the German Corporate
Governance Code and the principles of transparent and responsible manage-
ment and supervision of the Company with the goal of value enhancement.
The Management Board, the Supervisory Board as well as all executives and
employees of Gerresheimer AG are obligated to pursue these objectives
and principles. With one exception, Gerresheimer AG complies with all
recommendations of the German Corporate Governance Code as amended
on February 7, 2017.
MANAGEMENT BOARD
The Management Board of Gerresheimer AG consists of a minimum of
two members. In other respects, the Supervisory Board decides on the
number of Management Board members. The Supervisory Board appoints
one Management Board member as chairman of the Management Board or
as its speaker. The Management Board manages the Company autonomously.
In so doing, it is bound to act in the Company’s best interests and obligated
to increase shareholder value on a sustainable basis.
The Management Board informs the Supervisory Board regularly, promptly
and comprehensively on all issues relevant to the Company with regard to
strategy, planning, business performance, the risk situation, risk management
and compliance. Some of the key transactions and measures provided for
in the Rules for the Management Board require the prior consent of the
Supervisory Board.
The composition of the Management Board in the financial year 2018 is
presented on page 167 of the Annual Report.
SUPERVISORY BOARD
The Supervisory Board of Gerresheimer AG consists of twelve members, half
of whom represent the shareholders and half the employees. Shareholder
representatives are elected by the Annual General Meeting and employee
representatives by the employees. The period of office of the current Super-
visory Board members started at the end of the Annual General Meeting
on April 26, 2017 and runs to the end of the Annual General Meeting at
which a resolution is adopted on the formal approval of the actions of the
members of the Supervisory Board for the financial year 2021.
The Supervisory Board monitors and advises the Management Board in
running the business. To fulfill its duties, the Supervisory Board regularly
discusses business performance as well as planning, strategy and strategy
implementation with the Management Board. The Supervisory Board
approves the annual budget drawn up by the Management Board and
decides on adoption of the Annual Financial Statements as well as approval
of the Consolidated Financial Statements of Gerresheimer AG, notably taking
the auditor’s reports into account. The Supervisory Board also decides on
the appointment and dismissal of Management Board members and their
remuneration. In the event of a tied vote on the Supervisory Board, the
Chairman of the Supervisory Board has two votes if a new ballot on the
same matter is held and there is still a tie.
The composition of the Supervisory Board in the financial year 2018 is
presented on page 166 of the Annual Report.
The work of the Supervisory Board is supported by committees. According
to the Rules for the Supervisory Board, there are the following Supervisory
Board committees:
The Mediation Committee, set up in accordance with section 27 (3) of the
German Codetermination Act (Mitbestimmungsgesetz), presents proposals to
the Supervisory Board for the appointment of Management Board members
if the required majority of two-thirds of the votes of the Supervisory Board
members is not obtained in the first ballot. In the past financial year, the
Mediation Committee consisted of Dr. Axel Herberg (Chairman), Dr. Karin
Dorrepaal, Francesco Grioli and Franz Hartinger.
The Presiding Committee prepares the Supervisory Board’s personnel- related
decisions. In place of the Supervisory Board, the Presiding Committee decides
on the conclusion, amendment and termination of Management Board
members’ service contracts and pension agreements, except in the case of
remuneration issues requiring the approval of the full Supervisory Board.
Furthermore, the Presiding Committee is responsible for approving transactions
between the Company and members of the Management Board. The Presiding
Committee also decides on the approval of contracts with Supervisory Board
members in accordance with section 114 of the German Stock Corporation Act
(Aktiengesetz) as well as on granting loans to the group of persons specified
in sections 89 and 115 of the German Stock Corporation Act (Aktiengesetz).
In the past financial year, the Presiding Committee was composed of Dr. Axel
Herberg (Chairman), Francesco Grioli, Markus Rocholz and Udo J. Vetter.
Among other things, the Audit Committee prepares the Supervisory Board’s
decisions on adoption of the Annual Financial Statements, approval of the
Consolidated Financial Statements, the proposal for the election of auditors at
the Annual General Meeting and the agreement with the auditor. Furthermore,
the Audit Committee discusses the quarterly financial reports and the half-year
financial report. It takes appropriate measures to establish and monitor the
independence of the auditor. The Audit Committee is also responsible for
approving the award of non-audit services to the auditor. Additionally, the Audit
Committee supports the Supervisory Board in moni toring the management.
In this context, the Audit Committee deals with supervision of the accounting
and accounting process, the effectiveness of the internal control system, the
risk management system, the internal audit system, the audit of the financial
statements and compliance. In the past financial year, the Audit Committee
was made up of Theodor Stuth (Chairman), Andrea Abt, Francesco Grioli,
Dr. Axel Herberg, Markus Rocholz and Katja Schnitzler.
The Nomination Committee presents proposals to the Supervisory Board
regarding suitable candidates for its election proposals to the Annual General
Meeting with regard to Supervisory Board members as shareholder repre-
sentatives. In the past financial year, the Nomination Committee was made
up of Dr. Axel Herberg (Chairman), Dr. Peter Noé and Udo J. Vetter.
Pursuant to the German Corporate Governance Code and the Rules for
the Management Board and the Supervisory Board, the members of the
Management Board and the Supervisory Board must disclose any conflicts of
interest to the Chairman of the Supervisory Board. In the event of significant
conflicts of interest that are not merely temporary in nature, the Supervisory
Board member in question must resign from office. In its report to the Annual
General Meeting, the Supervisory Board provides information on any conflicts
CORPORATE GOVERNANCE REPORT
31
CORP OR ATE GOVERNANCE REP ORT
of interest that have arisen and how they have been handled. No conflicts
of interest arose during the reporting period with regard to Management
Board or Supervisory Board members.
Supplementary to the requirements for Supervisory Board members under the
law and the German Corporate Governance Code, the Supervisory Board,
in compliance with number 5.4.1 of the German Corporate Governance
Code, stipulated the following specific objectives in its Rules with regard
to the composition of the Supervisory Board and developed the following
profile of skills and expertise for the entire Supervisory Board:
Knowledge, skills and professional experience
The Supervisory Board must be composed in such a way that its members as
a group possess the knowledge, skills and professional experience required
to properly complete its tasks. Candidates proposed must have the integrity,
commitment, independence and personality to enable them to perform the
duties of a Supervisory Board member in the parent company of an interna-
tionally operating group and to uphold its good reputation among the public.
The various functional areas of the Company should be represented by
individual members of the Supervisory Board of Gerresheimer AG. Collectively,
they must be familiar with the sector in which the Company operates. Each
Supervisory Board member should be as specialized as possible in areas of
relevance to the Company’s business operations. Proposals for candidates
to the Supervisory Board should be made such as to ensure a balanced
composition with the desired areas of expertise represented on the Supervisory
Board as broadly as possible. The objective is for
› at least two representatives of the shareholders to have experience in the
fields of business management, strategy and human resources;
› at least one representative of the shareholders to have Company-specific
knowledge of the industry; and
› at least one representative of the shareholders to have specific industry
knowledge on the customer side.
Independence and conflicts of interest
The Supervisory Board should include independent members in a number
it deems to be sufficient. A Supervisory Board member is regarded as inde-
pendent if that member has no business or personal connection with the
Company or its Management Board that constitutes a conflict of interest. In
the judgment of the Supervisory Board, former members of the Company’s
Management Board are not deemed to be independent until five years
after leaving office. The existence of an employment relationship between
a Supervisory Board member and Gerresheimer AG or a Group Company or
the existence of pension commitments with one of these companies for the
benefit of a Supervisory Board member does not in itself constitute such a
conflict of interest. In this connection, the Supervisory Board stipulates the
following objectives for its composition:
› Supervisory Board members should not perform any functions in a
controlling body or any advisory functions for significant competitors of
the Company or a Group Company;
› Supervisory Board members should not take on any active role with
customers or suppliers of the Company or a Group Company;
› no more than two members of the Supervisory Board should be former
Management Board members of the Company; and
› at least four out of six representatives of the shareholders on the Super-
visory Board should be independent.
Availability
Members of the Supervisory Board should have sufficient time available to
exercise their duties such that their office can be performed with the required
regularity and care. As a rule, a Supervisory Board member who is a member
of the management board of a listed company should not exercise a total
of more than three supervisory board offices at listed companies or on the
supervisory bodies of unlisted companies with comparable requirements
that do not belong to the group of that company in which the management
board function is exercised.
Former Management Board members
No more than two members of the Supervisory Board should be former
Management Board members of the Company. Management Board members
should not become members of the Company’s Supervisory Board before
two years have passed since the end of their appointment, unless they are
elected at the proposal of shareholders who hold more than 25% of the
Company’s voting rights. In this case, a switch to the chairmanship of the
Supervisory Board should be an exception that has to be justified to the
Annual General Meeting.
Age limit
The term of office of a Supervisory Board member ceases at the end of the
first Annual General Meeting following the member’s seventieth birthday.
The Supervisory Board supports election proposals for candidates who will
turn seventy during the statutory election period; however, their terms of
office also cease at the end of the first Annual General Meeting following
their seventieth birthday.
Internationalism
At least one representative of the shareholders should have several years’
professional international business experience or be of foreign nationality.
Minimum percentage of women and men
The minimum percentages of women and men on the Supervisory Board
follow statutory requirements, as amended.
In its current composition, the Supervisory Board meets the profile of skills
and experience for the Supervisory Board as a whole. In particular, the
Supervisory Board believes that all current shareholder representatives on
the Supervisory Board, i.e. Dr. Axel Herberg, Andrea Abt, Dr. Karin Dorrepaal,
Dr. Peter Noé, Theodor Stuth and Udo J. Vetter, are independent.
ANNUAL GENERAL MEETING
The Annual General Meeting is the representative body of the shareholders
that makes the fundamental decisions for Gerresheimer AG. These include
profit appropriation, formal approval of the acts of the Management Board
and Supervisory Board, election of the shareholder representatives to the
Supervisory Board and election of the auditor. In addition, the Annual General
Meeting decides on amendments to the Articles of Association and key
corporate measures, particularly intercompany agreements and conversions,
the issue of new shares, convertible bonds and bonds with warrants as well
as the authorization to purchase own shares.
Gerresheimer AG ANNUAL REP ORT 201832
CORP OR ATE GOVERNANCE REP ORT
The shareholders have the opportunity to exercise their voting rights at the
Annual General Meeting themselves or to arrange for these to be exercised
through a proxy of their choice or a Company-designated proxy who is bound
by instructions. The Annual General Meeting is chaired by the Chairman
of the Supervisory Board.
FINANCIAL ACCOUNTING AND AUDITING
Financial accounting in the Gerresheimer Group is based on the Inter-
national Financial Reporting Standards (IFRS) as well as the regulations
under commercial law as set forth in section 315e (1) of the German
Commercial Code (Handelsgesetzbuch). The Annual Financial Statements
of Gerresheimer AG are prepared in accordance with the German Com-
mercial Code (Handelsgesetzbuch) and the German Stock Corporation Act
(Aktiengesetz).
The auditor is elected by the Annual General Meeting in accordance with
statutory provisions. Deloitte GmbH Wirtschaftsprüfungsgesellschaft,
Duesseldorf, was appointed as auditor for the financial year 2018. The
Supervisory Board engages the auditor elected by the Annual General Meeting
and determines the key audit priorities as well as the fee. It ensures that the
auditor’s work is not impaired by any conflicts of interest.
RISK MANAGEMENT
Good corporate governance includes responsible management of risks to
the enterprise. For this purpose, Gerresheimer AG has set up a systematic
risk management system above and beyond the legally required early
warning system for going concern risk. The risk management system ensures
timely risk identification, evaluation and control. It is subject to continuous
improvement. This helps to optimize risk positions.
TRANSPARENCY
Gerresheimer AG communicates openly, actively and comprehensively. It
informs shareholders, shareholder associations, analysts and interested
members of the public regularly, without delay and on an equal-entitlement
basis of the Company’s position and of key business changes. The Company’s
website ( www.gerresheimer.com) is one of the primary media used for
this purpose. The website contains the annual and interim reports, press
releases, ad hoc announcements and other notifications in accordance with
the Market Abuse Regulation, the Financial Calendar and other relevant
information. In addition, Gerresheimer AG regularly organizes analyst and
press conferences as well as events for investors.
REMUNERATION OF THE SUPERVISORY BOARD
The remuneration paid to the Supervisory Board in the financial year 2018
is presented and published in the Remuneration Report included in the
Group Management Report. In order to avoid unnecessary duplication, the
presentation in the Group Management Report is expressly incorporated
by reference in this Corporate Governance Report.
REMUNERATION OF THE MANAGEMENT BOARD
The remuneration paid to the Management Board in the financial year 2018 is
likewise presented and published in the Remuneration Report included in the
Group Management Report. The Company has agreed long-term share-price-
based variable remuneration with all members of the Management Board.
This so-called Phantom Stocks Program is also presented in the Remuneration
Report. In order to avoid unnecessary duplication, the presentation in the
Group Management Report is again expressly incorporated by reference in
this Corporate Governance Report.
On April 30, 2015, the Annual General Meeting of the Company approved
the remuneration system for the members of the Management Board. There
have been no changes to the system since.
DECLARATION OF COMPLIANCE
Pursuant to section 161 of the German Stock Corporation Act, the manage-
ment boards and supervisory boards of listed German stock corporations are
required to make an annual declaration of whether the recommendations of
the “Government Commission on the German Corporate Governance Code”
as published by the Federal Ministry of Justice and Consumer Protection in
the official section of the Federal Law Gazette (Bundesanzeiger) have been
complied with, or which recommendations have not been applied, and the
reasons for this.
On September 6, 2018, the Management Board and the Supervisory Board
of Gerresheimer AG approved the following, most recent, Declaration of
Compliance:
“Declaration of the Management Board and Supervisory Board
of Gerresheimer AG on the recommendations of the “Government
Commission on the German Corporate Governance Code” according
to section 161 of the German Stock Corporation Act.
With the exception of the recommendation of number 5.4.1, paragraph 2
sentence 2 Gerresheimer AG has complied with all recommendations of the
“Government Commission on the German Corporate Governance Code” as
amended on February 7, 2017, since its last declaration on September 5, 2017.
Gerresheimer AG will in future comply with all recommendations of the
“Government Commission on the German Corporate Governance Code” as
amended on February 7, 2017, again with the following exception:
Number 5.4.1, paragraph 2 sentence 2: The Supervisory Board has not defined
a regular limit for length of membership on the Supervisory Board.
Justification: Suitability for performing the duties of the Supervisory Board
depends in our opinion solely on the respective requirements of the company
and the individual competences of the Supervisory Board members. We do not
consider it to be meaningful to set a regular limit for length of membership
on the Supervisory Board as the expert knowledge of experienced Supervisory
Board members should be available to the company.”
This Declaration of Compliance and earlier Declarations of Compliance are
available on the Company’s website at www.gerresheimer.com.
33
GERRESHEIMER ON THE C API TAL MARKE T S
Reporting dateNovember 30, 2018
January February March April May June July August September OctoberDecember November December January
70%
90%
110%
120%
100%
130%
80%
THE 2018 STOCK MARKET YEAR
Buoyed by factors including the healthy global economic environment,
the international equity markets recorded a positive start to the financial
year 2018 until the beginning of February 2018. This trend did not continue
in the subsequent months, although the period up to the end of September
still saw largely robust economic situation. Persistent uncertainty about
international trade relations and the consequences of Brexit as well as political
debate surrounding the debt levels of some emerging economies repeatedly
put temporary pressure on stock price performance. Starting at the end of
September, the somewhat less optimistic prospects for the global economy in
particular reinforced the negative factors impacting the international equity
markets, which then came under significant pressure.
GERRESHEIMER SHARES
These developments also affected the performance of the Gerresheimer
share price and its benchmark index, the MDAX. Starting in mid-July, the
Gerresheimer AG share price posted a substantial increase on the back of
publication of the half-year results featuring an upgraded growth forecast
and the acquisition of Sensile Medical AG, reaching its high point for the
year of EUR 79.80 on September 12, 2018. When the international equity
markets came under pressure in September, Gerresheimer shares were unable
to escape the effects, too. At EUR 59.75, the share price hit its lowest level
in the financial year 2018 on October 15, 2018.
Despite a 6.2% decline, Gerresheimer shares outperformed the MDAX by
7% at the November 30, 2018 reporting date, closing the financial year 2018
at a price of EUR 62.90.
Taking into account the dividend payout, the -4.6% performance posted
by Gerresheimer shares beat the MDAX benchmark index (-13.2% for the
financial year 2018) by 8.7% as of the November 30, 2018 reporting date.
Viewed over the longer term, our share has continued to follow an upward
trajectory since the IPO in 2007. Including reinvested dividends, long-term
investors were able to generate a return in excess of 100% between our
IPO and November 30, 2018.
Persistent concerns over political risks and a slowdown in the global economy
continued to put international equity markets under pressure until the end of
December 2018. These developments were also reflected in the performance
of the Gerresheimer share price and the MDAX. Starting at the beginning of
January, the Gerresheimer share price has rapidly and markedly recovered,
rising above the EUR 60.00 mark to close at EUR 60.40 on January 18, 2019.
GERRESHEIMER ON THE CAPITAL MARKETS
Gerresheimer AG Shares Versus MDAX
Total performance including dividend payout Index: November 30, 2017 = 100%
Gerresheimer AG MDAX
Gerresheimer AG ANNUAL REP ORT 201834
GERRESHEIMER ON THE C API TAL MARKE T S
THE MAJORITY OF ANALYSTS CONTINUE TO GIVE BUY OR HOLD RECOMMENDATION
As of January 18, 2019, 15 bank analysts regularly covered the performance
of Gerresheimer AG, providing investment recommendations. Seven analysts
gave a buy recommendation and five a hold recommendation. Three analysts
recommended selling. As of January 18, 2019, the average price target was
EUR 70.64. The charts that follow provide an overview of the banks covering
Gerresheimer as of January 18, 2019, together with their recommendations:
Analyst CoverageBankhaus Lampe Equi.TS Kepler Cheuvreux
Berenberg Bank Goldman Sachs LBBW
Commerzbank Hauck & Aufhäuser MainFirst
Credit Suisse HSBC Metzler
Deutsche Bank J.P. Morgan CazenovePareto (formerly equinet bank)
2018 ANNUAL GENERAL MEETING: ANOTHER VERY STRONG CAPITAL ATTENDANCE – DIVIDEND RAISED TO EUR 1.10 PER SHARE
At the Annual General Meeting on April 25, 2018, 79.78% of the capital
stock was represented. All resolutions proposed by the Management Board
and Supervisory Board were approved by a large majority of shareholders. For
example, they approved payment of a dividend of EUR 1.10 per share (2017:
EUR 1.05 per share). This represents an increase of 4.8% per dividend-entitled
share and is the seventh consecutive dividend rise. The dividend was paid
out on April 30, 2018.
For the financial year 2018, the Management Board and Supervisory Board
will propose at the Annual General Meeting that a dividend of EUR 1.15
per share be paid out.
All key documents and information relating to the Annual General
Meeting are available at www.gerresheimer.com/en/investor-relations/
annual- general-meeting.
Gerresheimer Shares: Key Data
2018 2017
Number of shares at reporting date in million 31.4 31.4
Share price1) at reporting date in EUR 62.90 67.06
Market capitalization at reporting date in EUR m 1,975.1 2,105.7
Share price high1) during reporting period in EUR 79.80 78.01
Share price low1) during reporting period in EUR 59.75 61.03
Earnings per share in EUR 4.11 3.21
Dividend per share in EUR 1.15 2) 1.101) Xetra closing price.2) Proposed appropriation of net earnings.
Share Reference Data
ISIN DE000A0LD6E6
WKN A0LD6E
Bloomberg reference GXI
Reuters reference GXIG.DE
Stock index membership
MDAX, CDAX, HDAX, Prime All Share, Classic All Share, EURO STOXX TMI and further sector and size indexes
Listings
Berlin, Duesseldorf, Frankfurt (Xetra and floor trading), Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange
Hold / Neutral 5 (6)
Buy / Add / Overweight / Outperform7 (8)
Sell / Reduce / Underperform 3 (2)
Overview of Analyst Recommendations
as of January 18, 2019
Number (prior year)
35
GERRESHEIMER ON THE C API TAL MARKE T S
GROWTH INVESTORS AGAIN CLEARLY PREDOMINATE IN THE CONSISTENTLY STABLE SHAREHOLDER STRUCTURE
Based on available sources, our shareholder structure demonstrates that our
capital stock continues to have a strong international distribution. Looking at
our top 25 investors, investors in the Netherlands accounted for the largest
share of the free float at around 26% as of January 18, 2019, followed by
North American investors with around 24% and British investors with around
23%. German shareholders accounted for around 2%. As in the prior year,
the free float remained at 100% as per January 18, 2019. Based on our
top 25 shareholders, growth investors are again clearly the most common
investor type, followed by value investors.
According to the notifications we received, the following major shareholders
have an interest of more than 5% in Gerresheimer AG according to the
German Securities Trading Act (Wertpapierhandelsgesetz):
CompanyShare
in %Date of Notification
NN Group N.V. 5.20 September 17, 2014
Stichting Pensioenfonds ABP 5.10 July 30, 2015
BNP Paribas Investment Partners S.A. 5.07 December 16, 2016
These three major shareholders together hold around 15.4% of the free
float.
All voting rights notifications can be accessed on our website at
www.gerresheimer.com/en/investor-relations/corporate-governance/
voting-rights-announcements.
Other25 (22)
Index11 (11)
Germany2 (8)
Hedge 3 (7)
United Kingdom23 (16)
The Netherlands26 (22)
Growth68 (53)
North America 24 (32)
Value 18 (29)
Shareholder Structure: Top 25 Investors by Region
In % (prior year)
Shareholder Structure: Top 25 Investors by Investment Style
In % (prior year)
Gerresheimer AG ANNUAL REP ORT 201836
GERRESHEIMER ON THE C API TAL MARKE T S
GERRESHEIMER BOND
The bond launched on May 19, 2011 (ISIN XS0626028566) was redeemed at
maturity on May 21, 2018 at a redemption price of 100%. Totaling an issue
size of EUR 300.0m, the bond paid a coupon of 5% p.a.
GERRESHEIMER RATING
Gerresheimer AG’s ratings remained unaltered with Moody’s Baa3, outlook
negative rating confirmed in April and Standard & Poor’s BBB-, outlook
stable rating in May 2018, thus maintaining our investment grade status. As
Gerresheimer AG is no longer required to have a public rating following the
bond redemption in May 2018, Gerresheimer AG canceled the agreements
with the two rating agencies Moody’s and Standard & Poor’s in summer 2018.
Rating
Corporate rating as of May 31, 2018
Standard & Poor‘s: BBB-, outlook stableMoody‘s: Baa3, outlook negative
INVESTOR RELATIONS: DIALOG WITH THE CAPITAL MARKETS
Many institutional investors and analysts again took the opportunity for
personal dialog with the Management Board and Investor Relations so that
they could get to know our Company. We held roadshows and attended
investor conferences in both international and national financial centers
such as Frankfurt, London, Paris and New York. We were also available,
for example, for followup discussions with capital market participants in
a large number of conference calls. Private investors had the chance to
get acquainted with our Company at shareholder forums supported by
Investor Relations.
Our reports, webcasts and presentations can be accessed on our website at
www.gerresheimer.com/en/investor-relations/reports and www.gerresheimer.
com/en/investor-relations/presentations.
In line with our corporate philosophy, we will sustain our ongoing, depend-
able, transparent dialog with the capital markets in the coming financial year.
You will find our financial calendar and an overview of events at which we will
be presenting the Company on our website at www.gerresheimer.com/en/
investor-relations/dates/financial-calendar.
Financial CalendarApril 11, 2019 Interim Report 1st Quarter 2019
June 6, 2019 Annual General Meeting 2019
July 11, 2019 Interim Report 2nd Quarter 2019
October 10, 2019 Interim Report 3rd Quarter 2019
37
OF GERRESHEIMER AG
38 Gerresheimer AG ANNUAL REP ORT 2018
40 THE FINANCIAL YEAR 2018 AT A GLANCE
41 THE GERRESHEIMER GROUP
41 Business Activities
41 Divisions
42 Branch Offices
42 Group Strategy and Objectives
43 Control System
44 BUSINESS ENVIRONMENT
44 Overall Economic Conditions
44 Sectoral Development
45 Development on the Currency Markets
46 Energy and Commodity Market Trends
46 Changes in the Regulatory Environment
46 DEVELOPMENT OF THE BUSINESS
46 Effect of Economic Conditions on Business Performance
47 Attainment of Guidance in the Financial Year 2018
48 Management Board review of Business Performance
49 REVENUE PERFORMANCE
50 Revenues by Economic Region
50 RESULTS OF OPERATIONS
52 Net Finance Expenses
52 Income Taxes
53 Net Income and Adjusted Net Income
53 Income Statement: Key Items
54 Function Costs
54 Research and Development Costs
54 Proposal for appropriation of retained Earnings
(Proposed Dividend)
55 Performance Indicators in relation to Capital Employed
55 NET ASSETS
55 Balance Sheet
56 Balance Sheet Structure and Ratios
56 Non-Current Assets
56 Current Assets
56 Equity
56 Non-Current Liabilities
56 Current Liabilities
57 Net Working Capital
57 Off-Balance-Sheet Arrangements
57 Influence of Accounting Policies
57 FINANCIAL CONDITION AND LIQUIDITY
57 Principles and Objectives of Financial Management
58 Financing Instruments
58 Financial Liabilities and Credit Facilities
59 Acquisitions and Divestments
59 Analysis of Capital Expenditure
59 Operating Cash Flow
60 Cash Flow Statement
60 Management Board’s Overall Assessment of the Business Situation
61 NON- FINANCIAL GROUP DECLARATION PURSUANT
TO SECTION 315b HGB
61 Corporate Responsibility and Sustainability at Gerresheimer
64 Responsible Value Creation
67 Our Responsibility toward the Environment
70 Our Responsibility toward the Employees
75 Our Responsibility toward Society
76 Our Responsibility for Ethical Business Conduct and
conformity with the Law
77 Quality Management
78 INNOVATION, RESEARCH AND DEVELOPMENT
78 Engineering
79 Product Innovations
81 Customer-Specific Development
81 REMUNERATION REPORT
81 Management Board Remuneration
87 Remuneration of the Supervisory Board
88 DISCLOSURES PURSUANT TO SECTION 315a (1) HGB
AND EXPLANATORY REPORT
90 CORPORATE GOVERNANCE STATEMENT
90 Declaration of Compliance with the
German Corporate Governance Code
90 Information on Corporate Governance Practices
91 Diversity Policy for the Management Board and Supervisory Board
92 REPORT ON OPPORTUNITIES AND RISKS
92 Uniform Group-Wide Management of
Opportunities and Risks
92 Internal Control System in relation to the
Financial Reporting Process
93 Opportunities of Future Developments
94 Risks of Future Developments
94 Overview of Risks and their Financial Implications
94 Business Strategy Risks
95 External and Industry-Specific Risks
96 Operational Risks
98 Financial Risks
98 Risks Relating to the CSR Directive Implementation Act
98 Overall Assessment of the Group Risk Situation
99 EVENTS AFTER THE BALANCE SHEET DATE
99 OUTLOOK
99 Group Strategic Objectives
99 Development of the Economic Environment
99 Market and Business Opportunities for the Gerresheimer Group
102 Megatrends
104 Expected Results of Operations
105 Expected Financial Situation and Liquidity
105 Dividend Policy
105 Overall Outlook Assessment
39
› Revenue and adjusted EBITDA targets attained
› Revenues at constant exchange rates up 4.3% on the financial year 2017 to EUR 1,406.7m
› 3.4% organic revenue growth
› Reported revenues increased by 1.4% year-on-year to EUR 1,367.7m
› Despite higher costs of, notably, energy and resins, and excluding the negative effects
relating to the exemption from electricity network charges and to measurement of the
Triveni put option and of the Advanced Technologies Division, adjusted EBITDA at constant
exchange rates, at EUR 307.5m, was maintained at its strong prior-year level
› Reported adjusted EBITDA at EUR 298.6m
› July 2018 acquisition of Sensile Medical successfully integrated and
Advanced Technologies Division established
› Strong adjusted net income after non-controlling interests at EUR 178.0m
(prior year: EUR 127.5m), mainly due to positive impact of US tax reform
› Further increase in proposed dividend to EUR 1.15 per share (prior year: EUR 1.10 per share)
› Rigorous focus on profitable growth
› Guidance for 2019: Revenues at constant exchange rates expected
to be in a range of around EUR 1.4bn to EUR 1.45bn, against a comparative figure of
EUR 1,359.7m for the financial year 2018; adjusted EBITDA at constant exchange rates
expected to be approximately EUR 295m (plus or minus EUR 5m), compared with
EUR 289.1m in the financial year 2018. In addition, in the financial year 2019, other
operating income of approximately EUR 90m arises from the derecognition of contingent
consideration from the acquisition of Sensile Medical due to the termination of a customer
for a project to develop a micro pump for the treatment of heart diseases
› Large inhaler order for Europe secured with major international pharma producer and
Gerresheimer named main supplier of prefillable syringes for one of the largest heparin
producers; this will result in higher capital expenditure in the financial years 2019 and 2020
› New, experienced Chief Executive Officer Dietmar Siemssen taking up office on November 1,
2018. Dr. Bernd Metzner to become Chief Financial Officer by July 1, 2019 at the latest and
thus completes the Management Board again
THE FINANCIAL YEAR 2018 AT A GLANCE
40 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› The Financial Year 2018 at a Glance
THE GERRESHEIMER GROUP
BUSINESS ACTIVITIES
The Gerresheimer Group is a leading international manufacturer of high-qual-
ity specialty glass and plastic products for the global pharma and healthcare
industry. Backed by in-house innovation and the latest production tech-
nologies, we provide primary pharma packaging, drug delivery systems,
diagnostic systems and packaging for the cosmetics industry.
The Group consists of Gerresheimer AG, with its registered office in Dues-
seldorf, Germany, together with its direct and indirect subsidiaries and
associates. At the end of the financial year 2018, the Group had 46 loca-
tions in Europe, North and South America and Asia, with 9,890 employees
worldwide. This represents a 1.4% increase in our workforce compared
with November 30, 2017.
Gerresheimer AG is the parent Company of the Gerresheimer Group and
manages its direct and indirect subsidiaries and associates.
DIVISIONS
The Gerresheimer Group is managed through strategic business units
organized as divisions. These are aggregated into reporting segments based
on their specific production technologies and the materials we use in our
products. Since the acquisition of Sensile Medical, our business model is
organized in the three reporting and operating divisions Plastics & Devices,
Primary Packaging Glass, and Advanced Technologies.
Our segment reporting follows the management approach in accordance
with IFRS 8. External reporting is consequently based on internal reporting.
PLASTICS & DEVICESOur product portfolio in the Plastics & Devices Division includes complex,
customer- specific products for simple and safe drug delivery. These include
insulin pens, inhalers and prefillable syringes. The division also covers diagnos-
tics and medical technology products such as skin-prick aids and test systems
as well as pharmaceutical plastic containers for liquid and solid medicines with
closure and safety systems.
Activities in this division include developing and distributing complex systems
and system components made of plastic on a project basis. Our target market
is made up of customers in the pharma industry, diagnostics and medical
technology. We provide tailored services for these customers, spanning every
link in the value chain. Our medical plastic systems products range from inhalers
for the treatment of respiratory diseases to lancets and insulin pen systems for
diabetics as well as an extensive array of test systems and disposable products
for laboratory and molecular diagnostics.
The Plastics & Devices Division also provides plastic system packaging for use
with liquid and solid medication. Our broad range of high-quality primary
drug packaging products includes application and dosage systems, such as
eye droppers and nasal spray vials, as well as special containers for tablets
and powders. In addition, the range includes tamper-evident multifunctional
closure systems, child-resistant and senior-friendly applications, and integrated
moisture absorbers.
A feature of the US market for prescription medication is the ”pour-and-count“
system. The precise amount of oral medication stated in a prescription is
specially packaged for each patient in a plastic container. We again have a
strong product portfolio for this segment, supplying national and regional
pharmacy chains, supermarkets and wholesalers.
PRIMARY PACKAGING GLASSIn the Primary Packaging Glass Division, we produce primary packaging made
of glass for medicines and cosmetics. This includes pharma jars, ampoules,
injection vials, cartridges, perfume flacons and cream jars, plus special glass
containers for the food and beverage industry.
Our range for the pharmaceutical industry covers a broad array of glass primary
packaging products. Molded glass products meet market and customer
needs with a variety of injection, dropper and syrup bottles. We also produce
high-quality specialty products such as ampoules, vials and cartridges made
with borosilicate glass tubing. On this basis, we offer a virtually complete
range of pharmaceutical packaging in flint and amber glass.
Our product portfolio for the cosmetics industry encompasses high-quality
glass packaging such as vials and glass containers for perfumes, deodorants,
skincare and wellness products. We process clear, colored and opal glass. All
shaping, coloring, printing and exclusive finishing technologies are available
to us for this purpose.
For the food and beverage industry, we supply both standard and custom
miniature as well as other sizes of bottles and glass containers for products
such as spirit miniatures. Our products include a range of variations such as
amber, flint, colored and opal glass, diverse shape variants as well as numerous
finishing options.
ADVANCED TECHNOLOGIESThe Advanced Technologies Division develops and manufactures intelligent
drug delivery systems. The Swiss tech company Sensile Medical, which was
acquired in the financial year 2018, forms the basis of this division, which
offers pharmaceutical and biotech companies drug delivery systems with state-
of-the-art digital and electronic capabilities. Its portfolio currently comprises
patented micro pumps, which are used to self-administer medication for
diabetes or Parkinson’s for example.
41GROUP MANAGEMENT REP ORT› The Gerresheimer Group
BRANCH OFFICES
Gerresheimer AG and the subsidiaries included in the Consolidated Financial
Statements do not have any branch offices.
GROUP STRATEGY AND OBJECTIVES
Healthcare demand is growing worldwide. The main drivers are six global
megatrends (see under “Megatrends”, page 102):
› Rise in chronic diseases and aging population
› Rapid growth in generics
› Growing healthcare provision in emerging markets
› Stricter regulatory requirements
› New drugs, especially in biosimilars and biotech
› Growing trend toward self-medication
For us as a strategic partner in the development and production of quality
specialty packaging and drug delivery systems for the pharma and cosmetics
industry, all of this creates opportunities for further sustainable and profitable
growth. With our global capabilities, we can meet our customers’ increasing
needs in terms of impeccable quality—in industrialized nations and emerging
markets alike.
OUR VISION AND MISSIONWe pursue the vision of becoming the leading global partner for enabling
solutions that improve health and well-being. Our success is driven by the
passion of our people.
We are aided in achieving our vision by the following guiding principles:
1. Understanding our customers and providing them with solutions to both
their present and future needs.
Exceptional quality and delivery reliability, no matter how big the order, set us
apart. These are key factors enabling our customers to meet exacting market
requirements and regulatory standards. We also work with customers to break
new ground, anticipating trends such as self-medication and biologically pro-
duced drugs, developing new products and processes, and driving innovation.
2. Living our commitment to excellent quality and continuous innovation.
We work constantly to enhance our product range—notably with a view to
new drug developments and quality requirements—and invest in the key
growth markets of the future. Our longstanding experience, the consider-
able expertise and motivation of our workforce and our systematic capital
expenditure policy building on our sound financial base make us the partner
of choice to the pharma industry.
3. Leveraging our technological leadership and competence by acting as
one team.
Decades in the business of making glass and plastic packaging give us
very valuable expertise that we deploy to the benefit of our customers and
supplement with further training. We standardize our production systems
and processes across operating locations, ensure knowledge transfer be-
tween teams and measure outcomes against defined operational excellence
performance indicators.
4. Becoming a preferred employer with highly motivated and passionate
employees all over the world.
Our workforce of some 10,000 employees are the basis of our success today
and going forward. In recognition of this, we place emphasis on good working
conditions, employee development, talent management and comprehensive
lifelong learning. At the same time, we aim for a healthy mix of young and
experienced staff, and provide systematic initial and further training to foster
employee development in step with increasingly demanding requirements as
well as to secure workforce satisfaction.
These four elements of our mission underpin our overarching goal:
Expanding our global reach and creating profitable and sustainable growth.
OUR STRATEGIC GOALS
PROFITABLE GROWTHRevenues: base market growth + market
share gains + product mixProfitability measured against adjusted
EBITDA and operating cash flow
LEADING COMPETITIVE POSITIONLeading in: Products/technology CostsAt least top 3 in market share
FINANCIAL MARKET ATTRACTIVENESS
Continuous value enhancement
(Gx ROCE) and reliable debt repayment
1. Profitable growth
We target sustained profitable growth. To attain this goal, we plan to increase
revenues with existing customers and invest in new products and technologies
as well as to serve new regions, markets and customers. We also intend to
acquire selected companies that meet our criteria to this end. Our focus here is
on augmenting our portfolio with additions that gain us access to new regions
or new products, or enable us to buy into new technologies. We want to
grow with the market. In addition, we aim to achieve further organic growth
through market share gains and an improved product mix.
We focus on profitable growth as mirrored in increasing adjusted EBITDA
and higher operating cash flow. Key factors in this are our highly qualified
workforce, efficient state-of-the-art technology, strict cost control and high
standards of quality. We conduct targeted investment in training, production
efficiency and quality. Reliable delivery of high-quality pharma and cosmetics
packaging and drug delivery systems secures us a leading position as a globally
recognized partner to our customers.
42 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› The Gerresheimer Group
2. Leading competitive position
We aim to achieve a leading competitive position in the markets we serve,
whether through our products, technologies or cost leadership. We only invest
in areas where becoming one of the three leading companies by market share
is attainable for us.
3. Financial market attractiveness
Our goal is to continuously enhance value. In the medium term, this should
be reflected in improved Gerresheimer return on capital employed (Gx ROCE;
see the “Performance indicators in relation to capital employed” section).
Gx ROCE may be reduced in the short term as a result of acquisitions; how-
ever, the strategic sustainability of any acquisition must be clearly geared
toward profitable growth. In this way, we intend to ensure that we represent
an attractive investment for existing and future investors. We provide our
shareholders with their due share of our success by distributing a dividend.
For us, reliable debt repayment is a matter of course. Our solid financial base
also makes us a strong, reliable partner to customers and suppliers in a market
where stable, long-term relationships are highly valued.
Profitable growth is notably based on the following four growth drivers:
1. Unlocking further potential by expanding our value proposition, notably
by adding products and services related to our current portfolio
2. Further developing and launching products and innovations
3. Regional expansion—developing business in new markets
4. Stronger growth with existing and new customers
CUSTOMERS
REGIONAL EXPANSION
VALUE PROPOSITION
PRODUCTS AND INNOVATIONS
The Management Board discussed the specific objectives for the coming
financial year as well as the long-term strategic direction with the manag-
ers of the business units and presented them in numerous meetings with
employees and customers. The course set for the coming years was also
discussed with and adopted by the Supervisory Board as part of the annual
operational and strategic planning. Further details can be found in the
Outlook section beginning on page 99 et seq. of this Group Management
Report.
Strategic projects such as the acquisition of Sensile Medical and the asso-
ciated establishment of the Advanced Technologies Division, continuation
of the machinery strategy for vials, new product launches, expansion of
production capacity, systematic pursuit of automation and several others
are described in detail in the Group Management Report. All of these moves
significantly enhance our position as global partner to the pharma and
cosmetics industry, boost our profitable growth and make Gerresheimer
an attractive investment.
CONTROL SYSTEM
Our business activities are geared toward profitable growth and global market
leadership in the pharma/healthcare and cosmetics segments. The most
significant key performance indicators for control of the Gerresheimer Group
are consequently revenue growth, adjusted EBITDA, operating cash flow,
capital expenditure, net working capital and Gx ROCE. These performance
indicators are explained in detail in the following. No additional non-financial
performance indicators are used for management of the Group.
We measure growth on the basis of the organic period-to-period change in
revenues for the Gerresheimer Group and its divisions. This growth rate is
adjusted to factor out the effects of any acquisitions or divestments and of
exchange rate movements. Acquisitions and active portfolio management are
also part of our strategy for the onward development of the Gerresheimer
Group.
Our principal measure of profitability is adjusted EBITDA. This is defined as net
income before income taxes, net finance expense, amortization of fair value
adjustments, depreciation and amortization, impairment losses, restructuring
expenses, and one-off expenses and income. One-off income and expenses
consist of termination benefits for members of the Management Board, costs
of refinancing, reductions in the workforce and large-scale restructuring
(structural and strategic) that do not meet the strict criteria of IAS 37, costs
of acquisitions (up to the acquisition date) and divestments, corporate legacy
costs such as costs of arbitration proceedings, and costs relating to the
outcomes of tax audits. We aim for cost, technology, workforce and process
leadership relative to our competitors. This enables us to excel in serving
customers’ quality, service, price and innovation needs and to generate an
above-industry-average adjusted EBITDA margin.
43GROUP MANAGEMENT REP ORT› The Gerresheimer Group
We attach great importance to generating ample cash flow in order to
meet the varied expectations of our stakeholder groups. This is measured
as operating cash flow, which we define as follows: Adjusted EBITDA plus/
minus the change in net working capital (inventories, trade receivables, trade
payables and prepayments made and received), minus capital expenditure.
We set individual target levels by division and business unit for the two
KPIs adjusted EBITDA and operating cash flow. Rigorous control of capital
expenditure is a further key factor in our success. We appraise each project
in each business unit against the same target parameters. Discounted cash
flow analysis and payback periods are important elements of the appraisal
process. Expansion and rationalization projects are expected to achieve a
minimum 18% post-tax internal rate of return and a payback period of less
than three years. Strategic projects are normally required to have a payback
period of no more than five years. New plants and plant extensions may
exceed this.
The third parameter in operating cash flow alongside adjusted EBITDA and
capital expenditure is net working capital. This represents another ongoing
focus of our many improvement measures, including changes in payment
terms, improved receivables collection and production planning optimization
to cut inventory. By reduction and systematic management of average net
working capital measured on a monthly basis, we aim for a lasting decrease
in tied-up capital.
Focusing on adjusted EBITDA, capital expenditure (and hence, indirectly,
depreciation) and net working capital also means that we keep watch on
the key operating parameters determining Gx ROCE. This is defined at
Gerresheimer as adjusted EBITA over average capital employed, i.e. equity
plus interest-bearing debt capital less cash and cash equivalents or, using
the top-down formula, total assets less non-interest-bearing liabilities and
cash and cash equivalents. Gx ROCE is a key medium to long-term target
metric for us in addition to the indicators already covered. Based on the
targeted 18% minimum post-tax internal rate of return for expansion and
rationalization projects, Gx ROCE should be approximately 15% (previously
at least 12%) for the Gerresheimer Group in the long term.
Alongside the indicators for monitoring the financial development of the
business, non-financial management parameters are also instrumental to
our business success. Of key importance from a Group perspective in this
regard are our readiness to innovate, problem-solving expertise and notably
our ability to attract and retain highly qualified staff.
BUSINESS ENVIRONMENT
OVERALL ECONOMIC CONDITIONS
In its October 2018 outlook, the International Monetary Fund (IMF)1) expects
global economic growth at 3.7% for 2018.
The economic growth expectation for 2018 in the eurozone is now 2.0%.
This downgrade is due to weaker than expected growth in the first half
of 2018.
According to the Federal Ministry for Economic Affairs and Energy (BMWi),
the upturn in the German economy was merely interrupted in the third
quarter of the 2018 calendar year with a slight decline of -0.2% in economic
output.2) However, as this was solely attributable to non-recurring factors, the
BMWi expects the German economy to have already regained the upward
trend in the fourth quarter 2018. The IMF also predicts continued growth
for Germany, although it downgraded its July forecast by 0.3 percentage
points to 1.9%.
For the US, the IMF continues to expect a temporary strengthening of the
economy’s near-term momentum. The US growth projection for 2018 remains
unaltered at 2.9%. Substantial fiscal stimulus combined with already robust
private demand are highlighted by the IMF as the main growth drivers.
The IMF’s July growth forecast for emerging and developing markets in
2018 was revised downward by 0.2 percentage points to 4.7% due to the
anticipated negative impact of trade duties. Its economic growth forecast
for China in 2018 is 6.6%, which corresponds to the expectation given in
July. The economic growth estimate for India in 2018 remains unaltered
relative to July at 7.3%. Following the significant downgrade to the growth
forecast for Brazil in July due to the lingering effects of strikes and political
uncertainties, the IMF reduced its forecast by a further 0.4 percentage points
to 1.4% in its October report.
SECTORAL DEVELOPMENT
According to IQVIA3), volume growth on the global pharma market was just
0.3% in 2018. On this basis, IQVIA calculates an average annual growth rate
of 1.7% for the years 2014 to 2018, with 3% growth in the period 2011
to 2016 as against 6% in the period 2006 to 2011. This calculated average
annual growth rate of 1.7% for the years 2014 to 2018 is expected to play
out with 3.9% in the pharmerging markets4), 0.2% in developed markets
and -1.8% in the remaining markets.
1) International Monetary Fund: World Economic Outlook, October 2018.2) Federal Ministry for Economic Affairs and Energy: Monthly report, December 2018.3) IQVIA Institute, January 9, 2019.4) For a definition of pharmerging markets (emerging markets), please see Note (8) of the
Notes to the Consolidated Financial Statements.
44 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› The Gerresheimer Group› Business Environment
The generics subsegment recorded volume growth of 1.8% at global level
in 2018. The average annual growth rate here in the years 2014 to 2018
was 3.0%. In a regional comparison, the pharmerging markets showed an
average of 4.6% growth per year for the last five years, whereas average
annual volume growth in the developed markets was just 2.5% and the
other markets recorded a decline of 1.2%.
Based on this trend, IQVIA projects average annual volume growth in the
global pharma market of 2.2% for the years 2019 to 2023, compared
with the 3.0% that had been predicted for the years 2016 to 2021. The
expectation for pharmerging markets is for an average of 3.7% per year
in the next five years. While zero growth is expected for the developed
markets, average volume growth of 1.8% is projected for other markets.
For the generics subsegment, IQVIA expects volume growth at an average
of 2.9% for the next five years, with 4.9% anticipated for the pharmerging
markets. Zero growth is forecasted for the developed markets, while other
markets are expected to grow by 1.7%.
Overall, the pharma sector is considered to be one of the most crisis- resistant
industries. Despite the recent weakness, it continues to benefit from long-
term growth drivers such as demographic change and the increase in life
expectancy, which combine to create rising demand for healthcare. Wide-
spread diseases such as diabetes, asthma, dementia, cancer and allergies also
boost demand for healthcare. This is reflected in the megatrends relevant to
Gerresheimer: rise in chronic diseases and aging population, rapid growth
in generics, growing healthcare provision in emerging markets, stricter
regulatory requirements, new drugs (especially in biosimilars and biotech),
and the growing trend toward self-medication (see under “Megatrends”,
page 102).
This means the number of off-patent and biotech drugs is increasing. At
the same time, the industry benefits from the rise in global population and
the middle classes. Diseases of affluence such as cardiovascular disease,
asthma and diabetes are on the increase, fueling higher spending on med-
ical care. Besides innovative manufacturing processes, new compounds
and new drugs call for further refinements in packaging and drug delivery
systems. Protecting the high-quality contents as well as maintaining quality
assurance and unrestricted functionality are a top priority. Growing numbers
of innovative biotech drugs are coming onto the market that have to be
injected and must therefore be supplied in the necessary concentrations in
vials and/or prefilled syringes or other drug delivery devices. With respect
to packaging for medications, this means that manufacturers must offer a
wide range of technologies covering as much of the value chain as possible.
The more cyclical market for high-quality glass cosmetics packaging per-
formed well in the financial year 2018. Sophisticated glass cosmetics pack-
aging continues to be highly sought after, once again placing a premium on
glass container design and additional finishing techniques in the past year.
DEVELOPMENT ON THE CURRENCY MARKETS
After starting the financial year 2018 at a rate of 1.19 US dollars to the euro,
the US dollar weakened further during the first quarter due to concerns over
the growing US budget deficit, and hit its weakest level for the financial year
2018 of 1.25 US dollars to the euro in early February. On the back of rising
US base rates and the resulting yield advantage relative to the eurozone,
the US dollar strengthened again in the second quarter, reaching a rate of
1.15 US dollars to the euro at the end of May. By the end of October, the
currency was steady in a corridor of 1.13 to 1.18 US dollars to the euro and
reached its strongest level for the financial year 2018 of US dollars 1.12 to
the euro in mid-November, bolstered in particular by the dispute over the
Italian budget. At the end of the financial year 2018, the exchange rate
was 1.14 US dollars to the euro.
The average exchange rate in the financial year 2018 from December 1,
2017 to November 30, 2018 was consequently 1.18 US dollars to the euro,
higher than the prior-year average of 1.12 US dollars to the euro.
Other currencies that entail translation effects on translation into euros—the
Group reporting currency—for our quarterly and annual financial statements
showed a mixed picture in the reporting period. Currencies of various emerg-
ing economies, in particular, depreciated. Taking all exchange rate effects
into account, the euro appreciated during the reporting period so that
translation from other currencies into euros as the reporting currency had the
effect of reducing revenue growth. For this reason, we state revenue growth
in the “Revenue Performance” section on an organic basis, i.e. adjusted
for exchange rate effects, acquisitions and divestments. The US dollar ex-
change rate assumed for budgeting purposes for the financial year 2018
was 1.12 US dollars to the euro. The reporting date and average exchange
rates of major currencies for the Gerresheimer Group in the financial year
2018 and the prior year are additionally set out in Note (4) of the Notes to
the Consolidated Financial Statements.
45GROUP MANAGEMENT REP ORT› Business Environment
ENERGY AND COMMODITY MARKET TRENDS
A significant portion of production costs relates to raw materials for the
manufacture of glass and plastic. We have substantial energy requirements
on an ongoing basis, mainly due to the energy-intensive combustion and
melting processes in our high-temperature furnaces. Any significant rise in
energy prices could have an impact on the Gerresheimer Group’s results
of operations. Accordingly, we make use of the special compensation rule
for electricity cost-intensive companies under section 64 of the German
Renewable Energy Act (EEG). In addition, the Group extensively hedges
against increases in energy (electricity and gas) prices in order to absorb
rising energy costs. Gas prices in the Europe market rose by about 30% on
average during the financial year 2018. This had a negative impact on results
of operations of the Primary Packaging Glass Division notably in the second
half of the financial year 2018, amounting to around EUR 5m compared
with the prior year.
In the manufacture of plastic products, we are reliant on primary products
such as polyethylene, polypropylene and polystyrene. The prices of these
products largely depend on oil price trends. Prices of resins that we rely
on increased during the course of the financial year 2018, particularly in
the North American market. For example, the price of polypropylene rose
by some 20% on average during the period, which led to a temporary
reduction in earnings in the Plastics & Devices Division. We have passed on
such increases to customers in whole or in part and after a time lag on the
basis of contractually agreed price escalation clauses or by means of price
increases. This results in a net negative impact on our results of operations
of around EUR 5m compared with the prior year.
As a manufacturer of high-quality primary pharma packaging, we mainly use
quartz sand and soda lime as raw materials for glass products, along with
various additives in relatively small quantities. These basic products are freely
available and we procure them from a range of suppliers.
When we sold our glass tubing business to Corning in 2015, we signed
a ten-year supply contract for borosilicate glass tubing to meet our long-
term demand for this important intermediary product for the converting
business. We also process borosilicate glass tubing from other producers
at Gerresheimer.
Additional information on the Gerresheimer Group’s management of fluc-
tuations in energy and raw material prices is provided under the heading
“Energy and Raw Material Prices” in the “Operational Risks” section.
CHANGES IN THE REGULATORY ENVIRONMENT
Policymakers, especially in European industrialized countries and the US,
continue to attach great importance to proof of significant therapeutic
added value before new drugs are approved. For this reason, the competent
authorities usually carry out a detailed cost-benefit analysis before any new
drug can be released onto the market. This once again lent momentum to
generic drugs in industrialized countries in the financial year 2018.
Regulatory requirements tend to increase in quantity and scope from year
to year. While delivering major benefits to patients, this presents major
challenges for everyone in the market. Overall, however, the financial year
2018 did not bring any material change in the regulatory environment as
regards the pharma markets relevant to Gerresheimer. The heavy demands
placed on our business also serve as a tall barrier to entry for potential new
competitors.
DEVELOPMENT OF THE BUSINESS
EFFECT OF ECONOMIC CONDITIONS ON BUSINESS PERFORMANCE
Business with the pharma and healthcare industry is especially important to
the Gerresheimer Group as such business accounts for 82% of total revenues.
The financial year 2018 did not bring any material change in the regulatory
environment for the pharma markets relevant to us and so there was no
significant regulatory impact on the growth of our business. The more cyclical
market for high-quality glass cosmetics packaging performed very well.
Manufacturers reported growth in perfume and care products in particular.
We primarily market specialized, high-quality primary packaging products and
drug delivery systems made of glass and plastic. Our aim is to gain or hold a
position among the top three in the markets and product segments we serve.
46 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Business Environment› Development of the Business
ATTAINMENT OF GUIDANCE IN THE FINANCIAL YEAR 2018
We give our shareholders, customers and all other partners the opportunity
to assess our business development by publishing guidance at the beginning
of each financial year and adjusting this as needed over the course of the
year. Our guidance includes forward-looking statements on the development
of revenues, adjusted EBITDA and capital expenditure as a percentage of
revenues, all at constant exchange rates.
Development of published guidance during the financial year 2018
Guidance FY 2018
February 22, 2018 Second quarter 2018
July 12, 2018 Third quarter 2018 October 11, 2018 2018 Results
Revenues (constant FX rates)
Range from EUR 1.348bn to
EUR 1.4bn
Upper end on the basis of the
EUR 1.38bn to EUR 1.4bn range
Excluding the Advanced Technologies Division
still between EUR 1.38bn and EUR 1.4bn
EUR 1,393.8m1)
3.4% organic growth
Adjusted EBITDA (constant FX rates)
Range from EUR 305m to
EUR 315m
Confirmation of guidance FY 2018
February 22, 2018
Range of EUR 305m to EUR 315m
Depending on the advancement
of the necessary development work for the gained large projects
may tend toward approximately EUR 305m EUR 307.5m2)
Capital expenditure (constant FX rates)
Approximately 8% of revenues
Confirmation of guidance FY 2018
February 22, 2018
Confirmation of guidance FY 2018
February 22, 2018 8.4%1)
Average NWC (as % of revenues) (constant FX rates)
Approximately 16% at the end of 2018
Confirmation of guidance FY 2018
February 22, 2018
Confirmation of guidance FY 2018
February 22, 2018 17.2%
Long-term targets
Gx ROCEApproximately 15%
(previously at least 12%)
Despite the acquisition of Sensile Medical unaltered at
approximately 15%
Despite the acquisition of Sensile Medical unaltered at
approximately 15% 10.7%
Adjusted EBITDA Leverage 2.5x
Temporary increase due to the acquisition of Sensile Medical
to above 3.0x
Temporary increase due to the acquisition of Sensile Medical
to above 3.0x 3.1x 1) Excluding the Advanced Technologies Division.2) Excluding the Advanced Technologies Division and the two negative one-off effects of the exemption from electricity network charges and final fair value measurement of the Triveni put option.
Sensile Medical
Second quarter 2018 Initial, preliminary expectation
July 12, 2018Third quarter 2018 October 11, 2018 2018 Results
Revenues (constant FX rates) Approximately EUR 15m Approximately EUR 15m EUR 12.9m
Adjusted EBITA (constant FX rates) Approximately EUR -2m Approximately EUR -2m EUR 1.9m
47GROUP MANAGEMENT REP ORT› Development of the Business
MANAGEMENT BOARD REVIEW OF BUSINESS PERFORMANCE
The Gerresheimer Group performed in line with its own expectations in the
financial year 2018. Especially due to the very strong fourth quarter, revenues
at constant exchange rates rose by 4.3% from EUR 1,348.3m to EUR 1,406.7m
in the financial year under review. Reported revenues—after exchange rate
changes and acquisitions—were up 1.4%, at EUR 1,367.7m in the financial
year under review. Our revenues increased organically— adjusted for exchange
rate effects, acquisitions and divestments—by 3.4% compared with the prior
year. As Gerresheimer supplies leading pharma companies, we are notably also
dependent on the development of the market served by the pharma industry,
which saw volume growth of 0.3% on the global pharma market according
to IQVIA. On this basis, we grew faster than the market in 2018. Adjusted
EBITDA at constant exchange rates was EUR 308.0m in the financial year 2018
compared with EUR 310.8m in the prior year. However, three one-off effects
compared with the prior year have to be taken into account here. Firstly, we
recognized an expense of EUR 1.4m in the financial year 2018 due to the
European Commission’s decision on the exemption from electricity network
charges granted to large electricity- consuming enterprises in 2012 and 2013.
Secondly, final fair value measurement of the put option for acquisition of
the remaining 25% of shares in Triveni Polymers Private Ltd. (New Delhi/India)
resulted in recognition of an expense of EUR 1.1m in the financial year 2018
compared with income of EUR 3.6m in the financial year 2017. And thirdly,
at constant exchange rates, adjusted EBITDA for the Advanced Technolo-
gies Division is EUR 3.0m for the financial year 2018. Excluding these three
one-off effects, adjusted EBITDA at constant exchange rates would have been
EUR 307.5m in the financial year under review and thus at the same level as
in the prior year. Reported adjusted EBITDA in the financial year under review
amounts to EUR 298.6m. Excluding the expense relating to the exemption
from electricity network charges as well as the final fair value measurement
of the Triveni put option and the Advanced Technologies Division, adjusted
EBITDA would be EUR 298.1m, with an adjusted EBITDA margin of 22.0%.
Net income, at EUR 131.1m in the financial year 2018, was significantly up
on the EUR 103.1m prior-year figure. Adjusted net income was EUR 180.3m,
compared with EUR 130.0m in the prior-year period, which was a good result
overall. In the financial year under review, both net income and adjusted net
income include the positive effects from the remeasurement of deferred taxes
of our US subsidiaries included in the Consolidated Financial Statements due to
the US tax reform signed on December 22, 2017, amounting to EUR 44.8m, as
well as deferred tax income at a German subsidiary resulting from the future
usability of loss carryforwards recognized prior to the establishment of the
consolidated tax group in the amount of EUR 8.7m.
48 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Development of the Business
REVENUE PERFORMANCE
Especially due to the very strong fourth quarter, revenues at constant ex-
change rates increased by 4.3% or EUR 58.4m from EUR 1,348.3m in the
financial year 2017 to EUR 1,406.7m in the financial year 2018. Within this,
we generated revenues of EUR 12.9m in the Advanced Technologies Division
since its establishment as a result of the acquisition of Sensile Medical in
July 2018. In the financial year 2018, our revenues thus increased organi-
cally—adjusted for exchange rate effects, acquisitions and divestments and
therefore excluding the Advanced Technologies Division—by 3.4% compared
with the prior year. Reported revenues were up 1.4% on the prior year at
EUR 1,367.7m in the financial year under review.
in EUR m
at constant exchange rates as reported
2018 2017Change
in %1) 2018 2017Change
in %1)
Revenues
Plastics & Devices 777.9 757.2 2.7 751.3 757.2 -0.8
Primary Packaging Glass 617.6 592.0 4.3 605.2 592.0 2.2
Advanced Technologies 12.9 – – 12.9 – –
Subtotal 1,408.4 1,349.2 4.4 1,369.4 1,349.2 1.5
Intra-Group revenues -1.7 -0.9 84.6 -1.7 -0.9 84.6
Total revenues 1,406.7 1,348.3 4.3 1,367.7 1,348.3 1.4
1) Change calculated on a EUR k basis.
Revenues at constant exchange rates in the Plastics & Devices Division rose by
EUR 20.7m from EUR 757.2m in the prior year to EUR 777.9m in the financial
year 2018. This corresponds to revenue growth at constant exchange rates
of 2.7%, which is also in line with the organic revenue growth. Alongside
healthy demand for plastic vials for prescription drugs in the US, we also
saw good organic growth rates for plastic vials in India and South America.
However, revenues in this business unit increased only slightly in Europe.
Syringe sales were also slightly up on the prior year. The Medical Plastic
Systems Business Unit registered only marginal growth, largely due to the
loss of a major inhaler customer. In contrast, our inhaler project in Peachtree
City (Georgia/USA) performed very well. The performance of the engineering
and tooling business in the financial year 2018 remained stable compared
with the prior year, as we had expected. However, mainly due to the trend
in the US dollar, the Brazilian real and the Indian rupee—all of which fell
significantly on average in the financial year under review—reported revenues
were slightly down on the prior year. The Plastics & Devices Division thus
generated reported revenues of EUR 751.3m in the financial year 2018.
This figure was 0.8% or EUR 5.9m lower than the EUR 757.2m generated
in the financial year 2017.
In the Primary Packaging Glass Division, revenues at constant exchange rates
rose by 4.3% or EUR 25.6m from EUR 592.0m in the financial year 2017
to EUR 617.6m. Within this, the Moulded Glass Business Unit delivered
very positive growth rates, driven in particular by the strong demand in
our cosmetics business. In the Tubular Glass Business Unit, the US business
registered a strong year-on-year recovery. The Europe business also grew
compared with the prior year. Reported revenues increased by 2.2% in the
Primary Packaging Glass Division from EUR 592.0m in the financial year
2017 to EUR 605.2m in the financial year under review.
Revenues at constant exchange rates in the Advanced Technologies Division
amounted to EUR 12.9m in the financial year 2018 and exclusively related to
development revenues at Sensile Medical, which was acquired in July 2018.
At the end of September 2018, a wearable micro pump from Sensile Medical
received EU certification for the European market. A European pharma
company obtained CE certification for the pump, which is specially designed
for the treatment of Parkinson’s disease, and is bringing it to market.
49GROUP MANAGEMENT REP ORT› Revenue Performance
REVENUES BY ECONOMIC REGION
We generate the vast majority of revenues outside Germany. International
revenues came to EUR 1,063.2m or 77.7% of total revenues in the financial
year 2018 (prior year: EUR 1,035.2m or 76.8%). Europe and the Americas
remain Gerresheimer’s most important geographical sales regions. A further
ongoing focus is on revenues in emerging markets as a growth region.
IQVIA did not modify its definition of emerging markets in the financial year
2018. As before, 22 countries are defined as emerging markets. According
to the current definition employed by IQVIA, emerging market revenues
comprise revenues in Algeria, Argentina, Bangladesh, Brazil, Chile, China,
Colombia, Egypt, India, Indonesia, Kazakhstan, Mexico, Nigeria, Pakistan,
Philippines, Poland, Russia, Saudi Arabia, South Africa, Thailand, Turkey and
Vietnam. For further information, please see Note (8) of the Notes to the
Consolidated Financial Statements.
as reported as reported
2018 2017
in EUR m in % in EUR m in %
Europe1) 459.7 33.6 428.9 31.8
Germany 304.5 22.3 313.1 23.2
Americas1) 374.8 27.4 373.7 27.7
Emerging markets 206.8 15.1 206.5 15.3
Other 21.9 1.6 26.1 1.9
Total revenues 1,367.7 1,348.3
1) The stated revenues in Europe exclude revenues in Germany, Poland, Russia and Turkey and the revenues in the Americas exclude Argentina, Brazil, Chile, Colombia and Mexico.
Europe region revenues rose by EUR 30.8m or 7.2% to EUR 459.7m. This
increase is mainly attributable to the higher revenues in France, Italy, the
Netherlands and Spain. Revenues in these countries were some 15% higher
than in the prior year. The proportion of revenues attributable to the Europe
region increased slightly in the financial year under review to 33.6%, as
against 31.8% in the prior year. Counter to this development, revenues in
Germany fell by EUR 8.6m or 2.7% from EUR 313.1m in the prior year to
EUR 304.5m in the financial year under review due to postponed deliveries
in the Europe region. The proportion of revenues generated here declined
slightly from 23.2% in the prior year to 22.3% in the financial year 2018.
In the Americas region, revenues went up by 0.3%, from EUR 373.7m to
EUR 374.8m in the financial year 2018. The increase in this region was
primarily attributable to our inhaler project in Peachtree City (Georgia/USA).
However, the performance of the US dollar, which weakened significantly
against the euro compared with the prior year, had a negative impact in
the region. With a 27.4% share of total revenues (prior year: 27.7%),
the Americas region remains an important market for the Gerresheimer
Group. Due to the presence of global pharma companies and the country’s
demographic potential, the USA in particular will remain a core region for
our business activities.
Revenues in the emerging markets rose slightly from EUR 206.5m in the prior
year to EUR 206.8m in the financial year 2018. In India, we were able to
record a very sharp year-on-year rise despite the currency’s depreciation. The
performance of Brazil and Argentina had a counteracting effect, particularly
due to the development of their respective currencies. Overall, emerging
market revenues contributed 15.1% (prior year: 15.3%) to total Group
revenues in the financial year 2018.
RESULTS OF OPERATIONS
Adjusted EBITDA at constant exchange rates was EUR 308.0m in the financial
year 2018 compared with EUR 310.8m in the prior year. However, three
one-off effects compared with the prior year have to be taken into account
here. Firstly, we recognized an expense of EUR 1.4m in the financial year
2018 due to the European Commission’s decision on the exemption from
electricity network charges granted to large electricity-consuming enter-
prises in 2012 and 2013. Secondly, final fair value measurement of the put
option for acquisition of the remaining 25% of shares in Triveni Polymers
Private Ltd. (New Delhi/ India) resulted in recognition of an expense of
EUR 1.1m in the financial year 2018 compared with income of EUR 3.6m
in the financial year 2017. And thirdly, adjusted EBITDA for the Advanced
Technologies Division is EUR 3.0m for the financial year 2018. Excluding
these three effects, adjusted EBITDA at constant exchange rates would
have been EUR 307.5m in the financial year under review, and thus slightly
higher than the prior-year figure of EUR 307.2m. Exchange rate effects of
EUR 9.4m had a considerable impact on adjusted EBITDA in the financial year
2018. Adjusted EBITDA after exchange rate effects came to EUR 298.6m in
the financial year 2018, compared with EUR 310.8m in the prior year. The
adjusted EBITDA margin in the financial year under review was thus 21.8%.
Excluding the expense relating to the exemption from electricity network
charges (for further information, please see Note (13) of the Notes to the
Consolidated Financial Statements) as well as the final fair value measurement
of the Triveni put option and the Advanced Technologies Division, adjusted
EBITDA would be EUR 298.1m with an adjusted EBITDA margin of 22.0%,
which is as expected below the prior-year level of 22.8% not taking into
account the effect of the fair value measurement of the Triveni put option.
50 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Revenue Performance› Results of Operations
in EUR m
at constant exchange rates as reported
2018 2017Change
in %1) 2018 2017Change
in %1)
Margin in %2018
Margin in %2017
Adjusted EBITDA
Plastics & Devices 210.9 215.2 -2.0 203.0 215.2 -5.7 27.0 28.4
Primary Packaging Glass 116.2 116.0 0.3 114.7 116.0 -1.1 19.0 19.6
Advanced Technologies 3.0 – – 3.0 – – 23.0 –
Subtotal 330.1 331.2 -0.3 320.7 331.2 -3.2 – –
Head office/consolidation -22.1 -20.4 8.7 -22.1 -20.4 8.7 – –
Total adjusted EBITDA 308.0 310.8 -0.9 298.6 310.8 -3.9 21.8 23.1
1) Change calculated on a EUR k basis.
In the Plastics & Devices Division, we generated adjusted EBITDA at constant
exchange rates of EUR 210.9m in the financial year 2018, compared with
EUR 215.2m in the prior year. It should be noted, however, that final fair
value measurement of the put option for acquisition of the remaining 25% of
shares in Triveni Polymers Private Ltd. (New Delhi/India) resulted in recognition
of an expense of EUR 1.1m in the financial year 2018. In contrast, income
of EUR 3.6m was recognized as a result of the fair value measurement of
the put option in the prior year. Excluding this effect, adjusted EBITDA at
constant exchange rates would be slightly up on the prior-year figure of
EUR 211.6m at EUR 212.0m. Adjusted EBITDA includes a compensation
payment of EUR 9.0m from an inhaler customer who ceased to place orders
with the Gerresheimer plant in Kuessnacht (Switzerland) because his inhaler
business fell short of his expectations. Termination negotiations with the
customer were concluded in the third quarter 2018. Overall, we received total
compensation that roughly corresponded to the affected plant’s contribution
in the financial year 2018. Compensation was paid in full in the fourth
quarter 2018. As already communicated, the revenues of around EUR 8m
generated in the financial year 2018 and the resulting adjusted EBITDA
of roughly EUR 3m, as well as the compensation of EUR 9.0m mentioned
above, are non-recurring and should therefore not be taken into account
for future periods. We have begun relocation talks with other customers of
our Kuessnacht plant and expect, as planned, to be able to close the plant
at the end of 2019. Adjusted EBITDA was adversely affected to the tune of
around EUR 5m by higher costs for resins, which we can only partly pass on to
customers with a time lag of several months. We also had higher expenditure
in connection with our new Gx® Solutions targeting the emerging biotech
sector, which has mostly been allocated to the Plastics & Devices Division.
In addition, we incurred slightly higher expenses due to the rapid build-up
of capacity for our new inhaler project in Horsovsky Tyn (Czech Republic),
which is to deliver the first products to the customer as soon as the fourth
quarter 2020. Unadjusted for exchange rate effects, adjusted EBITDA in the
Plastics & Devices Division went down from EUR 215.2m in the financial
year 2017 to EUR 203.0m in the year under review. The adjusted EBITDA
margin thus amounted to 27.0% after 28.4% in the financial year 2017.
Adjusted EBITDA at constant exchange rates in the Primary Packaging Glass
Division increased from EUR 116.0m in the prior year to EUR 116.2m in the
financial year 2018. It is important to note in this connection, however, that
we have recognized an expense of EUR 1.4m in the financial year 2018 due to
the European Commission’s decision on the exemption from network charges
granted to large electricity-consuming enterprises in 2012 and 2013 (for
further information, please see Note (13) of the Notes to the Consolidated
Financial Statements). Without this effect, adjusted EBITDA at constant
exchange rates would have totaled EUR 117.6m, EUR 1.6m higher than in
the prior year. This is accounted for by the positive revenue performance in
the Primary Packaging Glass Division, notably due to the positive trend in
our North American business in the Tubular Glass Business Unit. Despite the
positive revenue trend, adjusted EBITDA in the Moulded Glass Business Unit
has been negatively impacted relative to the prior year by a substantial rise
in energy prices. These energy costs were around EUR 5m higher than in
the prior year and thus adversely affected adjusted EBITDA in the financial
year under review. Unadjusted for exchange rates, adjusted EBITDA in the
Primary Packaging Glass Division went down slightly in the financial year
2018 from EUR 116.0m to EUR 114.7m. Excluding the negative effect
resulting from the exemption from electricity network charges, adjusted
EBITDA would have been EUR 116.1m. The adjusted EBITDA margin thus
amounted to 19.0% after 19.6% in the financial year 2017.
Adjusted EBITDA at constant exchange rates generated by our Advanced
Technologies Division since its establishment in July 2018 amounted to
EUR 3.0m, slightly exceeding our expectations. This division currently consists
solely of Sensile Medical and exclusively comprises development revenues.
The head office expenses and consolidation item comes to EUR 22.1m, a
slight increase of EUR 1.7m on the prior year, and relates mainly to salary
adjustments for the employees concerned.
51GROUP MANAGEMENT REP ORT› Results of Operations
The table below shows the reconciliation of adjusted EBITDA to net income:
in EUR m 2018 2017 Change
Adjusted EBITDA 298.6 310.8 -12.2
Depreciation -96.51) -91.3 -5.2
Adjusted EBITA 202.1 219.5 -17.4
Acquisition Sensile Medical -1.6 – -1.6
Refinancing – -0.3 0.3
Portfolio optimization -14.5 -2.7 -11.8
One-off income and expenses 2) -5.9 -2.2 -3.7
Total of one-off items -22.0 -5.2 -16.8
Amortization of fair value adjustments 3) -40.6 -33.5 -7.1
Results of operations 139.5 180.8 -41.3
Net finance expense -32.3 -35.3 3.0
Income taxes 23.9 -42.4 66.3
Net income 131.1 103.1 28.0
1) Including EUR 1.8m in impairment losses unrelated to portfolio optimization.2) The one-off income/expenses item consists of one-off items that cannot be taken as an indicator
of ongoing business. These include, for example, various expenses for reorganization and structure changes which are not reportable as “restructuring expenses” according to IFRS.
3) Amortization of fair value adjustments relates to the intangible assets identified at fair value in connection with the acquisitions of Gerresheimer Regensburg in January 2007; the pharma glass business of Comar Inc., USA, in March 2007; Gerresheimer Zaragoza and Gerresheimer Sao Paulo in January 2008; Vedat in March 2011; Neutral Glass in April 2012; Triveni in December 2012; Centor in September 2015, and Sensile Medical in July 2018.
Adjusted EBITA amounted to EUR 202.1m (prior year: EUR 219.5m) based on
adjusted EBITDA of EUR 298.6m (prior year: EUR 310.8m) less depreciation
of EUR 96.5m (prior year: EUR 91.3m). This is reconciled to the results of
operations (EUR 139.5m; prior year: EUR 180.8m) by adding one-off items
totaling EUR 22.0m (prior year: EUR 5.2m) and amortization of fair value
adjustments in the amount of EUR 40.6m (prior year: EUR 33.5m). One-off
items mainly relate to portfolio optimization and other one-off income and
expenses.
Portfolio optimization amounted to EUR 14.5m in the financial year 2018,
compared with EUR 2.7m in the prior year. In the financial year under review,
the figure was pushed up by expenses related to the closure of our plant in
Kuessnacht (Switzerland), which was already communicated in the second
quarter 2018, and the planned staffing adjustments as part of the reorgani-
zation of the Plastics & Devices Division. This reorganization was carried out
based on the strategic decision to expand capacities in Eastern Europe and
relocate production to these regions. We have also initiated a reorganization
of the Primary Packaging Glass Division. This relates largely to a major capital
expenditure project through which we intend to increase our investments in
machinery required for automation and, therefore, staffing adjustments over
the coming financial years. Additionally, we plan to pool and expand our
purchasing capacities in this division. For further details, please see Note (12)
and (13) of the Notes to the Consolidated Financial Statements.
One-off income and expenses of EUR 5.9m (prior year: EUR 2.2m) in the
financial year under review were largely attributable to changes in the Man-
agement Board of Gerresheimer AG. The figure primarily relates to expenses
associated with the unexpected departure of the former Chief Executive
Officer from the Management Board of Gerresheimer AG for personal
reasons, which we already communicated in the first quarter 2018. We also
recognized expenses related to the departure of two further Management
Board members in the financial year 2019 (see also the Remuneration Report
and Note (38) of the Notes to the Consolidated Financial Statements).
Amortization of fair value adjustments rose by EUR 7.1m from EUR 33.5m
to EUR 40.6m in the financial year 2018. This increase is attributable to the
acquisition of Sensile Medical in July 2018.
NET FINANCE EXPENSES
Largely due to the refinancing carried out in September 2017 by means of
a EUR 250.0m promissory loans and the EUR 300.0m bond redeemed in
May 2018, the net finance expense for the financial year 2018 was lower
than the prior-year figure (EUR -35.3m) at EUR -32.3m and thus, as expected,
showed an improvement on the prior year. This improvement is the net
outcome of EUR 5.3m lower interest expenses, a EUR 2.0m reduction in
interest income and a EUR 0.3m rise in other finance expenses that was
mainly due to larger exchange rate differences.
INCOME TAXES
The income taxes item for the financial year 2018 shows tax income of
EUR 23.9m compared with a tax expense of EUR 42.4m in the prior year.
This income is largely due to the remeasurement of deferred taxes of our
US subsidiaries included in the Consolidated Financial Statements due to the
US tax reform signed on December 22, 2017, amounting to EUR 44.8m, as
well as deferred tax income at a German subsidiary resulting from the future
usability of loss carryforwards recognized prior to the establishment of the
consolidated tax group of EUR 8.7m. Without these two positive one-off
effects in the amount of EUR 53.5m, the item would have shown an income
tax expense of EUR 29.6m. This would have resulted in a comparable tax rate
of 27.6% for the financial year 2018, which is in line with our expectation of
around 28%, compared with a tax rate of 29.2% for the financial year 2017.
52 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Results of Operations
NET INCOME AND ADJUSTED NET INCOME
The Gerresheimer Group generated net income of EUR 131.1m in the period
December 1, 2017 to November 30, 2018. This represents a considerable
increase of EUR 28.0m on the prior-year figure.
in EUR m 2018 2017 Change
Net income 131.1 103.1 28.0
Acquisition Sensile Medical -1.6 – -1.6
Related tax effect 0.5 – 0.5
Refinancing – -0.3 0.3
Related tax effect – 0.1 -0.1
Portfolio optimization -14.5 -2.7 -11.8
Related tax effect 3.5 1.1 2.4
One-off income and expenses -5.9 -2.2 -3.7
Related tax effect 1.7 0.6 1.1
Amortization of fair value adjustments -40.6 -33.5 -7.1
Related tax effect 9.3 11.7 -2.4
One-off effects in the net finance expense -1.8 -0.6 -1.2
Related tax effect 0.5 0.2 0.3
Tax special effects – -1.1 1.1
Related interest effect -0.3 -0.2 -0.1
Adjusted net income 180.3 130.0 50.3
Attributable to non- controlling interests 2.2 2.2 –
Amortization of fair value adjustments -0.2 -0.5 0.3
Related tax effect 0.1 0.2 -0.1
Adjusted net income attributable to non- controlling interests 2.3 2.5 -0.2
Adjusted net income after non-controlling interests 178.0 127.5 50.5
Adjusted earnings per share in EUR after non- controlling interests 5.67 4.06 1.61
Adjusted net income (defined as net income before non-cash amortization
of fair value adjustments, non-recurring effects of restructuring expenses,
portfolio adjustments, the balance of one-off income and expenses—
including significant non-cash expenses—and related tax effects) was
EUR 180.3m in the financial year 2018, compared with EUR 130.0m in the
prior year. The adjusted net income after non-controlling interests amounted
to EUR 178.0m in the period December 1, 2017 to November 30, 2018,
as against EUR 127.5m in the financial year 2017. Accordingly, adjusted
earnings per share after non-controlling interests came to EUR 5.67 in the
financial year 2018 (prior year: EUR 4.06).
One-off effects included in net finance expense consist of EUR 1.8m in
expenses due to the early refinancing of the bond redeemed in May 2018.
This included the use of the funds from the promissory loans issued in
September 2017 to grant a US dollar intercompany loan to an American
subsidiary in order to temporarily clear the revolving credit facility until
bond redemption in May 2018. In accordance with internal guidelines,
the intercompany loan was hedged against exchange rate changes at the
time it was granted. The hedge guaranteed that a USD/EUR exchange rate
fixed at the time of issue will apply when the intercompany loan is repaid.
The hedge accounts for an expense of EUR 1.4m. This item also includes
expenses for bank commitment fees charged in respect of the temporarily
cleared revolving credit facility and for negative interest on the surplus cash
from the early refinancing, in each case for the time from the beginning of
the financial year to the redemption of the bond in May 2018.
INCOME STATEMENT: KEY ITEMS
in EUR m 2018
in % of
revenues 2017
in % of
revenues
Revenues 1,367.7 1,348.3
Cost of sales -967.6 -70.7 -934.4 -69.3
Selling expenses -168.2 -12.3 -168.1 -12.5
Administrative expenses -91.1 -6.7 -87.5 -6.5
Restructuring expenses -11.3 -0.8 -2.6 -0.2
Other operating expenses and income 10.0 0.7 25.1 1.9
Results of operations 139.5 10.2 180.8 13.4
Net finance expense 1) -32.3 -2.4 -35.3 -2.6
Income tax 23.9 1.7 -42.4 -3.1
Net income 131.1 9.6 103.1 7.6
Attributable to non-controlling interests 2.2 2.2
Attributable to equity holders of the parent 128.9 100.9
1) Net finance expense comprises interest income and expenses related to the net financial debt of the Gerresheimer Group. It also includes net interest expenses for pension provisions together with exchange rate effects from financing activities and from related derivative hedges.
53GROUP MANAGEMENT REP ORT› Results of Operations
FUNCTION COSTS
The 3.6% increase in cost of sales to EUR 967.6m (prior year: EUR 934.4m)
was mainly due to the higher cost of materials. In addition, energy prices
and the cost of resins also increased significantly in the financial year
2018. Energy costs were up by around EUR 6m on the prior year, with the
Primary Packaging Glass Division accounting for around EUR 5m of this
figure. Furthermore, the amortization of fair value adjustments included in
the cost of sales increased significantly compared with the prior year due
to the technologies acquired through the acquisition of Sensile Medical.
Personnel expenses, in contrast, only increased very moderately compared
with the prior year. As a percentage of revenues, cost of sales increased by
1.4 percentage points. This slight increase in the cost of sales was offset by
a slight decline of 0.2 percentage points in selling expenses as a percentage
of revenues. In absolute terms, selling expenses remained at their prior-year
level. Administrative expenses as a percentage of revenues remained virtually
unchanged compared with the financial year 2017.
Net other operating income and expenses came to EUR 10.0m, compared
with EUR 25.1m in the prior-year period. This decline is mainly attributable
to one-off expenses of EUR 11.0m (prior year: EUR 2.9m), which in the
financial year under review largely related to changes in the Management
Board of Gerresheimer AG and the announced closure of our plant in
Kuessnacht (Switzerland). In addition, the final fair value measurement of
the put option for acquisition of the remaining 25% of shares in Triveni
Polymers Private Ltd. (New Delhi/India) resulted in recognition of an expense
of EUR 1.1m compared with income of EUR 3.6m in the financial year
2017. Moreover, an expense of EUR 1.4m was recognized in this item in the
financial year under review due to the European Commission’s decision on
the exemption from network charges granted to large electricity-consuming
enterprises in 2012 and 2013.
RESEARCH AND DEVELOPMENT COSTS
Our aim is to become the leading global partner for enabling solutions that
improve health and well-being. At the same time, our customers’ require-
ments are changing: Innovation and quality play an increasingly important
role in the market. This makes issues such as rising quality expectations as
well as innovative products and solutions integral to our growth strategy. We
continue to invest on an ongoing basis in both enhancing production and
product quality as well as in fine-tuning our product portfolio. This entails
close collaboration with our customers and with our partners in industry,
in the scientific community and in other institutions.
We manufacture specialized products—primary pharma packaging—that
come into direct contact with pharmaceuticals and that patients use in
everyday life to take their medication. Our primary packaging and drug
delivery devices are important products for the pharma industry. Primary
packaging and drug delivery devices are subject to extremely strict require-
ments imposed by the national and international regulatory authorities,
particularly with regard to manufacturing processes and product quality.
Newly developed drugs also create more demanding requirements for primary
packaging products and their quality. Simple and safe drug application is
also an increasingly important focus. With our continuous improvements in
products and processes and our innovations, we have established a strong
position in the market and with our customers—a position that we aim to
further enhance.
A total of EUR 2.9m (prior year: EUR 3.5m) was spent on research and
development in the financial year under review. We also capitalized a further
EUR 1.3m of development costs in the financial year 2018 (prior year:
EUR 3.6m). Research and development activities are exclusively carried out by
Gerresheimer AG’s subsidiaries. These activities are closely geared to customer
needs and accordingly often take place in collaboration with customers.
In some cases, staff from pharmaceuticals companies work with us at our
Competence Centers. The costs associated with these customer-specific
research and development projects are largely borne by our customers. For
further information, please see “Innovation, research and development”.
PROPOSAL FOR APPROPRIATION OF RETAINED EARNINGS (PROPOSED DIVIDEND)
At the Annual General Meeting on June 6, 2019, the Management Board
and Supervisory Board of Gerresheimer AG will propose that a dividend of
EUR 1.15 per share be paid for the financial year 2018 (prior year: EUR 1.10
per share). This represents a total dividend distribution of EUR 36.1m and an
increase of 4.5% against the prior-year dividend. The payout ratio amounts
to 20.3% of adjusted net income after non-controlling interests. The distri-
bution is in line with our dividend policy of distributing between 20% and
30% of adjusted net income after non-controlling interests to shareholders,
according to our operating performance. Following the acquisition of Sensile
Medical in the financial year 2018 and the resulting temporary increase in
debt to an adjusted EBITDA leverage ratio of more than 3.0x, we consciously
decided to keep the distribution at the lower end of this range. Neverthe-
less, Gerresheimer shareholders will participate once again this year in the
business success of the Gerresheimer Group. Furthermore, a proposal will
be made to carry forward the Company’s remaining retained earnings of
EUR 149.8m to new accounts.
54 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Results of Operations
PERFORMANCE INDICATORS IN RELATION TO CAPITAL EMPLOYED
Gerresheimer return on capital employed (Gx ROCE) is implemented as a
profitability metric at Group level and indicates how efficiently we put the
capital employed in the business to work. It is a key medium to long-term
target indicator for the Gerresheimer Group. ROCE is defined as adjusted
EBITA over average capital employed, which is calculated as total assets less
non-interest-bearing liabilities and cash and cash equivalents. Calculated on
the basis of the published Consolidated Financial Statements (as the average
of the reporting date amounts for the prior year and the year under review),
Gx ROCE was 10.7% in 2018 and 12.9% in 2017.
Numerator
Denominator Average capital employed
Adjusted EBITA
A further indicator we track is Gerresheimer Return on Net Operating Assets
(Gx RONOA). This is defined as the ratio of adjusted EBITA to average net
operating assets, comprising the sum of property, plant and equipment and
net working capital. Calculated on the basis of the published Consolidated
Financial Statements (as the average of the reporting date amounts for the
prior year and the year under review), Gx RONOA was 24.9% in the financial
year 2018 and 27.3% in the prior-year period. This performance indicator
is also suitable for comparison with other companies, notably because it
excludes acquisition effects (such as goodwill).
Numerator
Denominator Average net operating assets
Adjusted EBITA
Both performance indicators were negatively impacted in the short term
by the acquisition of Sensile Medical, in particular, with a significantly more
positive contribution—especially to adjusted EBITA—expected in the coming
financial years.
NET ASSETS
BALANCE SHEET
The Gerresheimer Group’s net assets changed as follows in the financial
year 2018:
Assets in EUR m
Nov. 30, 2018
Nov. 30, 2017
Change in %1)
Intangible assets, property, plant, equipment and investment property 2,131.0 1,709.5 24.7
Investment accounted for using the equity method 0.3 0.3 17.9
Other non-current assets 27.8 19.1 45.3
Non-current assets 2,159.1 1,728.9 24.9
Inventories 171.5 148.4 15.6
Trade receivables 273.5 242.7 12.7
Other current assets 126.8 324.1 -60.9
Current assets 571.8 715.2 -20.0
Total assets 2,730.9 2,444.1 11.7
Equity and Liabilities in EUR m
Nov. 30, 2018
Nov. 30, 2017
Changein %1)
Equity and non-controlling interests 890.1 789.5 12.7
Non-current provisions 152.5 155.3 -1.8
Financial liabilities 751.4 681.3 10.3
Other non-current liabilities 168.5 144.6 16.5
Non-current liabilities 1,072.4 981.2 9.3
Financial liabilities 389.7 337.7 15.4
Trade payables 207.3 176.3 17.6
Other current provisions and liabilities 171.4 159.4 7.5
Current liabilities 768.4 673.4 14.1
Total equity and liabilities 2,730.9 2,444.1 11.7
1) Change calculated on a EUR k basis.
Total assets in the Gerresheimer Group rose by a significant EUR 286.8m or
11.7% year on year to EUR 2,730.9m as of November 30, 2018. This rise was
mainly influenced by the acquisition of Sensile Medical and the associated
assets and liabilities.
55GROUP MANAGEMENT REP ORT› Results of Operations› Net Assets
BALANCE SHEET STRUCTURE AND RATIOS
Non-current assets increased significantly to EUR 2,159.1m (prior year:
EUR 1,728.9m). This corresponds to growth of EUR 430.2m or 24.9%.
Compared with the prior year, non-current assets increased to 79.1% of
total assets (prior year: 70.7%). Current assets amounted to EUR 571.8m as
of the reporting date, down 20.0% on the prior-year figure (EUR 715.2m).
They thus account for 20.9% of total assets (prior year: 29.3%). The assets
side of the balance sheet showed a significant increase in intangible assets,
notably due to the acquisition of Sensile Medical and, in the opposite direc-
tion, a significant decrease in cash and cash equivalents. On the equity and
liabilities side of the balance sheet, equity was up significantly compared
with the figure as of November 30, 2017. At the same time, both current
and non-current financial liabilities increased as a result of the acquisition
of Sensile Medical.
NON-CURRENT ASSETS
Intangible assets, property, plant and equipment and investment prop-
erty amounted to EUR 2,131.0m as of the reporting date (prior year:
EUR 1,709.5m). This change is mostly attributable to a sharp EUR 404.5m
rise in intangible assets from EUR 1,101.2m as of November 30, 2017 to
EUR 1,505.7m as of the reporting date, mainly due to the acquisition of
Sensile Medical. Within this, technology notably went up by EUR 384.6m.
This increase comprises EUR 394.9m from the addition of the technology as
of the acquisition date of Sensile Medical less EUR 10.3m in amortization of
fair value adjustments. Goodwill increased by EUR 5.0m due to the acquisition
of Sensile Medical and by a further EUR 8.8m due to exchange rate changes.
During the fourth quarter 2018, goodwill again changed slightly as a result
of the net working capital and net debt adjustments agreed with the seller.
Customer relationships decreased by EUR 16.3m, comprising EUR 30.0m
in amortization of fair value adjustments versus a EUR 13.7m increase
from exchange rate changes. Property, plant and equipment amounted to
EUR 620.7m as of the November 30, 2018 reporting date, compared with
EUR 602.6m as of the prior-year reporting date. The change mostly relates
to capital expenditure on property, plant and equipment in the amount of
EUR 109.5m, less depreciation in the amount of EUR 90.4m and impairment
losses of EUR 1.8m. Other non-current assets went up from EUR 19.1m as
of the prior-year reporting date to EUR 27.8m as of November 30, 2018.
This increase is primarily attributable to the rise in deferred tax assets from
EUR 11.0m as of November 30, 2017 to EUR 19.5m as of the reporting date.
CURRENT ASSETS
Current assets amounted to EUR 571.8m as of the November 30, 2018
reporting date and were thus a significant EUR 143.4m below the EUR 715.2m
recorded as of the prior-year reporting date. This is mainly due to significantly
lower cash and cash equivalents on account of the bond redemption in
May 2018. In contrast, inventories rose by 15.6% and trade receivables by
12.7% relative to the prior-year reporting date. As of the reporting date,
inventories amounted to EUR 171.5m (prior year: EUR 148.4m) and trade
receivables to EUR 273.5m (prior year: EUR 242.7m). Inventories and trade
receivables made up 16.3% of total assets as of the reporting date, compared
with 16.0% as of the prior-year reporting date.
EQUITY
Gerresheimer Group equity, including non-controlling interests, rose
by EUR 100.6m to EUR 890.1m. The increase reflects the positive net
income, which more than offset the profit distributions of EUR 34.5m to
Gerresheimer AG shareholders and EUR 1.7m to non-controlling interests.
Exchange differences also increased equity by EUR 3.6m. The equity ratio
was 32.6% as of November 30, 2018, compared with 32.3% as of the end
of the financial year 2017.
NON-CURRENT LIABILITIES
Non-current liabilities were up EUR 91.2m on the prior-year reporting date
at EUR 1,072.4m (prior year: EUR 981.2m). The main factor here was the
increase in financial liabilities relating to the still outstanding long-term
purchase price components from the Sensile Medical acquisition. Deferred tax
liabilities were also up on the prior-year reporting date. However, this reflects
opposing factors: On the one hand, deferred tax liabilities rose sharply due to
the acquisition of Sensile Medical, while, on the other, deferred tax liabilities
declined as a result of the US tax reform signed in late December 2017.
CURRENT LIABILITIES
Current liabilities totaled EUR 768.4m as of the reporting date, representing an
increase of 14.1% or EUR 95.0m on the prior-year reporting date. They thus
make up 28.1% of total equity and liabilities (prior year: 27.5%). This mainly
reflects larger drawings on the revolving credit facility and the still outstanding
short-term purchase price components related to the acquisition of Sensile
Medical. However, current liabilities were reduced by the EUR 300.0m bond
redemption at maturity in May 2018. Trade payables were up EUR 31.0m
on the prior-year reporting date, at EUR 207.3m as of November 30, 2018.
56 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Net Assets
FINANCIAL CONDITION AND LIQUIDITY
PRINCIPLES AND OBJECTIVES OF FINANCIAL MANAGEMENT
Control and optimization of the Gerresheimer Group’s finances is primarily
the responsibility of Group Treasury at Gerresheimer AG. Our overriding
objective is to safeguard liquidity at all times through central procurement
of funding as well as active control of currency and interest rate risk. We
ensure an appropriate level of funding on an ongoing basis through rolling
liquidity planning and central cash management.
In order to institutionalize decision and control processes in connection with
safeguarding liquidity, financial planning and associated risk management,
the Management Board has established an Investment Committee. Com-
prising the CFO as well as the heads of Controlling, Accounting, Strategy,
Mergers & Acquisitions and Treasury, the Committee normally meets on a
quarterly basis. The core remit of the Investment Committee is to discuss
and monitor relevant financial operating conditions for the Gerresheimer
Group. Potential changes in extraneous factors in line with current market
projections are appraised along with the financing situation and strategic
growth options. All ideas and upcoming projects with a major financial
impact are combined, assessed to determine whether they are fundable
and re-examined from a risk management standpoint. Documents from the
Investment Committee are provided to the other members of the Manage-
ment Board for information after each meeting. This means we have an
additional early warning and control mechanism to supplement universal
application of the dual control principle.
As we operate worldwide, we use a range of tools to ensure effective
financial management. In this way, we minimize any negative impact of
default, currency and interest rate risk on the Gerresheimer Group’s net
assets, financial position and results of operations or cash flows.
The maximum credit risk from receivables faced by the Gerresheimer Group is
the aggregate carrying amount of the receivables. We extend trade credit in
the ordinary course of business and carry out regular assessments for specific
financial status levels (credit checks). Bad debt allowances are recognized
for doubtful receivables. Specific customer credit risk is measured using
past collection experience and other information such as credit reports. We
counter default risk by restricting contractual partners to those of good to
very good credit standing. This is based on national and international agency
ratings and rigorous observance of risk limits stipulated under trade credit
insurance or internally.
NET WORKING CAPITAL
As of November 30, 2018, the Gerresheimer Group’s net working capital
stood at EUR 202.7m, up EUR 17.0m compared with the November 30,
2017 figure.
in EUR mNov. 30,
2018Nov. 30,
2017
Inventories 171.5 148.4
Trade receivables 273.5 242.7
Trade payables 207.41) 176.3
Prepayments received 34.9 29.1
Net working capital 202.7 185.7
1) Including EUR 0.1m in non-current trade payables.
The gain in net working capital compared with November 30, 2017 mainly
reflects the rise in trade receivables and inventories, particularly due to the
strong fourth quarter 2018. This was partly offset by the increase in trade
payables and an increase in prepayments received. At constant exchange
rates, the increase in net working capital in the financial year 2018 came to
EUR 17.6m, compared with a decline of EUR 10.3m in the financial year 2017.
As a percentage of revenues in the last twelve months, average net working
capital came to 17.3% as of November 30, 2018. As of the reporting date, net
working capital as a percentage of revenues amounted to 14.0% excluding
the Advanced Technologies Division, compared with 13.8% in the prior
year. Including the Advanced Technologies Division, net working capital as
a percentage of revenues would be 14.8%.
OFF-BALANCE-SHEET ARRANGEMENTS
There were operating lease obligations totaling EUR 37.9m as of the reporting
date (prior year: EUR 39.8m). These relate to rentals and operating leases
for buildings, machinery, vehicles and IT.
INFLUENCE OF ACCOUNTING POLICIES
No accounting policies or related accounting options were applied in the
Consolidated Financial Statements 2018 that differ from prior years and that,
if applied differently, would have had a material effect on the Group’s net
assets, financial position and results of operations. Information on the use
of estimates and on the assumptions and judgments applied is provided in
Note (5) of the Notes to the Consolidated Financial Statements.
57GROUP MANAGEMENT REP ORT› Net Assets› Financial Condition and Liquidity
Our international focus means that we conduct many transactions in foreign
currency. To counter the connected risk of exchange rates moving to our
disadvantage, we use forward exchange contracts that hedge cash flows from
outstanding orders denominated in foreign currency. Orders, receivables and
payables are hedged as a rule with forward exchange contracts on inception.
To counter interest rate risk, Group Treasury at Gerresheimer AG monitors
interest rate trends on an ongoing basis and takes out corresponding interest
rate hedges as needed.
Safeguarding the Gerresheimer Group’s liquidity while allowing sufficient
reserves for special eventualities is an integral part of ongoing liquidity
management. Intra-Group cash pooling and intercompany lending permit
efficient use of liquidity surpluses at Group companies to meet the cash
needs of other Group companies. Sufficient cash pool lines and intercompany
loans meant that there were neither financing nor liquidity shortfalls in the
financial year 2018.
FINANCING INSTRUMENTS
Our overall financing includes a syndicated loan in the form of a EUR 450.0m
revolving credit facility with a five-year term to maturity, which was signed
as part of a refinancing arrangement on June 9, 2015. The revolving credit
facility is subject to a mandatory standard financial covenant comprising the
ratio of net financial debt to adjusted EBITDA (adjusted EBITDA leverage).
The revolving credit facility carries a basic rate of interest equal to EURIBOR
(for drawings in euros) or LIBOR (for drawings in US dollars) for the drawing
period, plus a margin depending on attainment of the adjusted EBITDA
leverage and a drawdown commission in line with the current loan status.
The acquisition of Centor (Ohio/USA) on September 1, 2015 was financed
by Gerresheimer AG’s successful EUR 425.0m promissory loans in November
2015 and pro rata from the proceeds of the sale of the glass tubing business.
The Gerresheimer AG promissory loans signed on November 2, 2015 and paid
out on November 10, 2015 comprise one five-year tranche in the amount of
EUR 189.5m, one seven-year tranche in the amount of EUR 210.0m and one
ten-year tranche in the amount of EUR 25.5m. Mostly, the separate tranches
are fixed-interest, although a portion is variable-interest.
Making use of the favorable market environment, the bond that matured
in May 2018 was refinanced ahead of schedule on September 27, 2017 by
means of EUR 250.0m promissory loans. The promissory loans comprise one
five-year tranche in the amount of EUR 95.5m, one seven-year tranche in
the amount of EUR 109.0m and one ten-year tranche in the amount of
EUR 45.5m. Mostly, the separate tranches are fixed-interest, although a small
portion is variable-interest. This early refinancing transaction made it possible
to clear the revolving credit facility in full as of May 18, 2018.
The EUR 300.0m bond launched on May 19, 2011 with a 5.0% p.a. coupon
was redeemed in full on May 21, 2018.
As a result of the bond redemption and the financing of the first purchase
price installment for the acquisition of Sensile Medical in July 2018, we again
drew on the revolving credit facility.
Our foreign subsidiaries also have finance in the shape of approved bilateral
borrowings, including bank overdrafts, in an amount equivalent to EUR 19.9m.
For information on the terms governing these financing instruments, please
see Note (31) of the Notes to the Consolidated Financial Statements.
FINANCIAL LIABILITIES AND CREDIT FACILITIES
Net financial debt developed as follows:
in EUR mNov. 30,
2018Nov. 30,
2017
Financial debt
Syndicated facilities
Revolving credit facility (since June 15, 2015)1) 264.4 –
Total syndicated facilities 264.4 –
Senior notes – euro bond – 300.0
Promissory loans – November 2015 425.0 425.0
Promissory loans – September 2017 250.0 250.0
Local borrowings incl. bank overdrafts1) 19.9 16.7
Finance lease liabilities 7.7 8.0
Total financial debt 967.0 999.7
Cash and cash equivalents 80.6 287.0
Net financial debt 886.4 712.7
1) The exchange rates used for the translation of US dollar loans to euros were as follows: as of November 30, 2018: EUR 1.00/USD 1.1359; as of November 30, 2017: EUR 1.00/USD 1.1849.
Net financial debt increased year on year and amounted to EUR 886.4m as
of November 30, 2018, compared with EUR 712.7m as of the prior-year
reporting date. Adjusted EBITDA leverage in accordance with the credit line
agreement as of November 30, 2018 was 3.1x as of the reporting date (prior
year: 2.3x). This is considerably higher than as of the prior-year reporting
date due to the acquisition of Sensile Medical.
The revolving credit facility (with a facility amount of EUR 450.0m) was
drawn by EUR 264.4m as of November 30, 2018 (prior year: EUR 0.0m).
Consequently, EUR 185.6m was available to us under the revolving credit
facility as of November 30, 2018 for capital expenditure, acquisitions and
other operational requirements.
58 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Financial Condition and Liquidity
ACQUISITIONS AND DIVESTMENTS
In July 2018, Gerresheimer signed an agreement to acquire around 99.89%
of the capital shares and voting rights in Sensile Medical (Olten/Switzerland).
The share purchase was carried out with effect from June 30, 2018 and
the company has therefore been included in the Consolidated Financial
Statements of Gerresheimer AG from that date. Sensile Medical is a lead-
ing company in the field of micro pump technology combined with drug
delivery devices featuring electronic and connected capabilities for medical
applications. With this acquisition, Gerresheimer has extended its business
model in the direction of an original equipment manufacturer (OEM) for
drug delivery platforms with digital and electronic capabilities for pharma-
ceutical and biopharmaceutical customers. Sensile Medical is involved with
pharma companies at an earlier phase of drug and therapy development.
The Company holds a large number of patents and is remunerated by the
pharma companies it partners with on attainment of specified milestones
in the development phase and by way of royalties after product launch. It
generates additional revenue from the sale of devices, where the products
can be manufactured either by external producers or by Gerresheimer’s
Medical Systems Business Unit. As a result, Sensile Medical has little capital
expenditure and low net working capital. Following the net working cap-
ital and net debt adjustments in the fourth quarter 2018, the discounted
purchase price totals EUR 334.6m.
In addition, Gerresheimer exercised the call option to acquire the 25% of
shares in Triveni Polymers Private Ltd. (New Delhi/India) held by third parties,
which it had held since the company was acquired on December 20, 2012.
At the time of the acquisition, a put option was also agreed with the sellers,
allowing them to tender the same shares for sale to Gerresheimer. Due to the
exercise of the call option by Gerresheimer, the put option has now expired.
The purchase price of EUR 15.6m for the remaining shares was paid in the
fourth quarter 2018.
ANALYSIS OF CAPITAL EXPENDITURE
Gerresheimer undertook capital expenditure on property, plant and equip-
ment and intangible assets as follows in the financial year 2018:
in EUR m 2018 2017Change
in %1)
Plastics & Devices 64.7 70.9 -8.7
Primary Packaging Glass 47.8 41.3 15.6
Advanced Technolgies 0.5 – –
Head Office 1.7 6.4 -72.1
Total capital expenditure2) 114.7 118.6 -3.2
1) Change calculated on a EUR k basis.2) Including additions to finance leases in the amount of EUR 0.1m (prior year: EUR 2.1m),
which are a non-cash item.
As in the prior year, the Plastics & Devices Division accounted for the lion’s
share of capital expenditure. The main focus of this expenditure was the
expansion of our inhaler production in the US and the Czech Republic. A
further focus was on expanding the product portfolio and creating additional
production capacities.
Capital expenditure in the Primary Packaging Glass Division mainly related to
furnace repairs in the US and Germany, production plant moder nization and
automation, and expansion of finishing capabilities at one of our cosmetics
plants. As in prior years, we also invested in molds and tools.
Capital expenditure by region
In EUR m
60
70
50
40
30
20
10
0
2018 2017
EuropeGermany Americas Emergingmarkets
47.9
14.5
34.4
21.8
61.2
15.3 17.7 20.5
From a regional perspective, 53.3% of capital expenditure in the financial
year 2018 was accounted for by Germany (prior year: 40.4%), 17.8% by
the emerging markets (prior year: 18.4%), 15.5% by the Americas (prior
year: 29.0%) and 13.4% by the Europe region (prior year: 12.2%).
Capital expenditure in Germany primarily related to the onward develop-
ment of the product portfolio and the expansion of production capacities
in the Plastics & Devices Division. In addition, in the Primary Packaging Glass
Division, a prepayment was made for the scheduled furnace repair in Essen
(Germany), and finishing capacities were expanded. In the Europe region,
capital expenditure mainly targeted the expansion of inhaler production
in the Czech Republic and production capacities in the Plastics & Devices
Division. Capital expenditure in the Americas region primarily related to the
furnace repair in Chicago Heights (Illinois/USA) in the Primary Packaging
Glass Division, as well as the expansion of inhaler production in Peachtree
City (Georgia/USA) in the Plastics & Devices Division. Furthermore, plant
automation and modernization as well as the development of production
processes in the Primary Packaging Glass Division were a focus at global level.
OPERATING CASH FLOW
in EUR m 2018 2017
Adjusted EBITDA 298.6 310.8
Change in net working capital -17.6 10.3
Capital expenditure -114.6 -116.5
Operating cash flow 166.4 204.6
Net interest paid -28.9 -24.0
Net taxes paid -37.0 -49.7
Pension benefits paid -11.9 -12.3
Other -29.6 -12.9
Free cash flow before acquisitions/divestments 59.0 105.7
Acquisitions/divestments -172.5 1.4
Financing activity -95.4 60.5
Changes in financial resources -208.9 167.6
59GROUP MANAGEMENT REP ORT› Financial Condition and Liquidity
At EUR 166.4m, operating cash flow was down EUR 38.2m on the prior-year
figure of EUR 204.6m. This decline is largely due to the change in net working
capital, which rose considerably year on year due to the very strong fourth
quarter 2018. The operating cash flow margin—operating cash flow as a
percentage of revenues each at constant exchange rates—was 12.3% in
the financial year 2018.
CASH FLOW STATEMENT
in EUR m 2018 2017
Cash flow from operating activities 173.4 219.2
Cash flow from investing activities -286.9 -112.1
Cash flow from financing activities -95.4 60.5
Changes in financial resources -208.9 167.6
Effect of exchange rate changes on financial resources -0.8 -3.7
Financial resources at the beginning of the period 271.6 107.7
Financial resources at the end of the period 61.9 271.6
Cash flow from operating activities decreased by 20.8% to EUR 173.4m in
the financial year 2018. This change is due in part to the lower net income
before income taxes in the financial year under review compared with the
prior year. In addition, net working capital rose considerably as against
the prior-year reporting date—due in large part to the very strong fourth
quarter 2018—and led to capital being tied up, which negatively impacted
the cash flow from operating activities. This was partly offset by significantly
lower income tax payments in the year under review compared with the
prior-year period.
The EUR 286.9m net cash outflow from investing activities is significantly
larger than the EUR 112.1m prior-year figure. This is mainly attributable to
the EUR 172.5m paid to acquire Sensile Medical. We invested EUR 114.6m
in intangible assets and property, plant and equipment in the financial
year compared with EUR 116.5m in the prior year. In addition, there were
proceeds from asset disposals totaling EUR 0.3m in the period December 1,
2017 to November 30, 2018, as against EUR 3.1m in the prior-year period.
The net cash outflow from financing activities amounted to EUR 95.4m
in the reporting year (prior year: net cash inflow of EUR 60.5m) and is
attributable to the bond redemption in May 2018 and, with a counteracting
effect, the larger drawing on the revolving credit facility in connection with
the acquisition of Sensile Medical. The Company also paid EUR 15.6m to
acquire the remaining 25% of shares in Triveni Polymers Private Ltd. (New
Delhi/India). Distributions to third parties amounted to EUR 36.3m in the
financial year 2018 as against EUR 34.9m in the prior year.
The Gerresheimer Group had EUR 61.9m in financial resources as of No-
vember 30, 2018 (prior year: EUR 271.6m). As of the end of the reporting
period, Gerresheimer additionally had at its disposal a EUR 450.0m revolving
credit facility, drawings on which were EUR 264.4m as of the November 30,
2018 reporting date. The remaining amount is available to Gerresheimer
for purposes such as capital expenditure, acquisitions and other operational
requirements.
MANAGEMENT BOARD’S OVERALL ASSESSMENT OF THE BUSINESS SITUATION
We are satisfied with the 4.3% increase in revenues at constant exchange
rates to EUR 1,406.7m for the financial year 2018. Adjusted EBITDA at
constant exchange rates was influenced by three one-off effects in the
financial year under review. Firstly, we recognized an expense of EUR 1.4m
in the financial year 2018 due to the European Commission’s decision on the
exemption from electricity network charges granted to large electricity-con-
suming enterprises in 2012 and 2013. Secondly, final fair value measurement
of the put option for acquisition of the remaining 25% of shares in Triveni
Polymers Private Ltd. (New Delhi/India) resulted in recognition of an expense
of EUR 1.1m in the financial year 2018 compared with income of EUR 3.6m
in the financial year 2017. And thirdly, adjusted EBITDA for the Advanced
Technologies Division is EUR 3.0m for the financial year 2018. Excluding
these three one-off effects, adjusted EBITDA at constant exchange rates
would have been EUR 307.5m in the financial year under review, and thus
slightly higher than the prior-year figure of EUR 307.2m. Adjusted net income
after non-controlling interests came to EUR 178.0m in the financial year,
significantly exceeding the prior-year figure of EUR 127.5m. Adjusted net
income after non-controlling interests was primarily influenced by income
taxes and one-off effects. The positive effect related to income taxes is largely
due to the remeasurement of deferred taxes of our US subsidiaries included
in the Consolidated Financial Statements due to the US tax reform signed
on December 22, 2017, amounting to EUR 44.8m, as well as deferred tax
income at a German subsidiary resulting from the future usability of loss
carryforwards recognized prior to the establishment of the consolidated
tax group of EUR 8.7m.
At EUR 114.7m, capital expenditure was 3.2% down on the prior year.
Operating cash flow, at EUR 166.4m, was below the prior-year figure of
EUR 204.6m, mainly due to the rise in net working capital. At 3.1x, adjusted
EBITDA leverage—the ratio of interest-bearing net financial debt to adjusted
EBITDA in accordance with the credit line agreement as of November 30,
2018—was well above the prior-year figure of 2.3x due to the acquisition
of Sensile Medical. Our net asset position remains very solid. Equity and
non-current liabilities provided 90.9% coverage of non-current assets (prior
year: 97.6%). The equity ratio increased from 32.3% as of the prior-year
reporting date to 32.6% as of November 30, 2018.
60 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Financial Condition and Liquidity
NON- FINANCIAL GROUP DECLARATION PURSUANT TO SECTION 315b HGB
CORPORATE RESPONSIBILITY AND SUSTAINABILITY AT GERRESHEIMER
Since 2010, Gerresheimer has formalized, communicated and implemented
its position on corporate responsibility and sustainability across the Group in
its “Corporate Responsibility” guideline. This guideline has been continuously
updated and was last revised in May 2018. The principles of sustainability
and corporate responsibility are part of our corporate philosophy, which
is firmly rooted in our vision, our mission and our five values of integrity,
responsibility, excellence, teamwork and innovation. At all our sites around
the world, we work and act in accordance with those principles.
We also address new requirements, such as those introduced by the German
CSR Directive Implementation Act (CSR-RUG), through internal standards.
The required information on environmental, social and employee matters,
on respect for human rights and combating corruption and bribery is pro-
vided in full in the following non-financial Group declaration. Only the
measurement of our CO2e emissions, water consumption and waste levels
was previously based on the Carbon Disclosure Project’s (CDP’s) submission
deadline, which differed from our financial year. The data is collected globally
for the CDP in the spring for the previous year. Consequently, up to now
the data reviewed and published by the CDP was always one financial year
behind in the non-financial Group declaration in our Group Management
Report. This is also the case in the current Annual Report, meaning that the
CO2e emissions, water consumption and waste figures for the financial year
2017 are presented. The measurement process will be completely overhauled
for the coming financial year, bringing it into line with our financial year
going forward.
Furthermore, the themes and details reported on are guided by the require-
ments of the Global Reporting Initiative (GRI), the internationally recognized
sustainability reporting organization. In the year under review, the framework
was thus in place, although the GRI “Core” Standard was not yet fully
satisfied. We intend to achieve this over the medium term.
The Supervisory Board of Gerresheimer AG appointed Deloitte GmbH
Wirtschafts prüfungsgesellschaft to perform a limited assurance review of
the conformity of the non-financial Group declaration with the CSR-RUG.
Deloitte reported its results to the Supervisory Board of Gerresheimer AG
at the latter’s meeting on February 13, 2019.
The information provided in the non-financial Group declaration relates both
to Gerresheimer AG and its direct and indirect subsidiaries and associates,
including Sensile Medical, which was acquired in July 2018.
Please see the “Report on Opportunities and Risks” for information on
material non-financial risks in accordance with the CSR-RUG requirements.
Further information about our vision, mission and corporate values is provided
on our website at www.gerresheimer.com/en/company/vision-mission-values.
Information about corporate responsibility at Gerresheimer is provided at
www.gerresheimer.com/en/company/corporate-social-responsibility.
STRATEGIC ANALYSIS, MATERIALITY AND TARGETSSustainability is important to us, in every sense of the word. In accordance
with our business model (for further details, see “The Gerresheimer Group”),
the main focus of our activities is on our products and the benefits they
provide. By developing and manufacturing products for the packaging of
drugs as well as their simple and safe dosage and administration, we make
a valuable contribution to the health and well-being of society. Responsible
development and production processes therefore have the highest priority.
Continuous improvement of our quality standards, conservation of natural
resources, avoidance of waste and the manufacture of products that are
easy to use and deliver maximum safety define our way forward.
However, we have a far broader understanding of corporate responsibility and
sustainable business that has led us to adopt our own corporate responsibility
principles. These describe our corporate responsibility toward society, our
workforce, investors, customers and suppliers, and the environment. We are
happy to be publicly measured against these principles. Many of our interna-
tional pharma and cosmetics customers regularly evaluate our sustainability
and corporate social responsibility strategy and its implementation. We also
engage in ongoing dialog with our investors about our sustainability strategy.
To improve the effectiveness of our existing sustainability strategy, we intro-
duced a systematic process in the financial year 2017 to record and prioritize
the demands placed on us by external and internal stakeholders using the
recognized materiality analysis methodology, which we continued to apply in
the financial year 2018. The following key inputs reflecting the requirements
of our internal and external stakeholders are factored in:
1. The areas of focus of many of our pharma and cosmetics customers,
which either individually audit us with regard to sustainability or have
the audit carried out by recognized CSR audit agencies such as EcoVadis
or Ecodesk, as well as direct discussions with customers.
2. Investor and analyst surveys on aspects of sustainability and input from
discussions conducted with capital market players by our Management
Board or by Investor Relations.
3. General public opinion and policy guidelines, particularly from the EU
and the US, but also local policy and local public opinion.
4. The Company perspective based on input from the Management Board
as well as from operational and human resources management.
5. Employee views based in particular on the employee survey conducted
in the financial year 2018.
61GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
Materiality matrix
Ranking of economic, ecological and social aspects by their relevance to our business activities
Imp
ort
ance
fo
r th
e ex
tern
al s
take
ho
lder
s
of
the
Ger
resh
eim
er G
rou
p
Importance for the Gerresheimer Group
low
er
lower
Biodiversity Environment
Marketing and product communication
Value creation
hig
her
higher
Conflict minerals Value creation
Diversity and equal opportunities
Employees
Employee rights Employees
Child labor in emerging markets
Employees
Human rights in emerging markets
Employees
Political influence Society
Corporate citizenship Society
Emissions Environment
Energy efficiency Environment
Occupational health and safety
Employees
Initial and further training Employees
Human resources development
Employees
Sustainable procurement management
Value creation
Compliance Compliance
Customer satisfaction Value creation
Patient safety Value creation Water consumption
Environment
Waste Environment
Discrimination Employees
The following materiality matrix shows the economic, ecological and social
themes we identified and prioritized through the process described. A theme
positioned in the top right triangle is highly relevant for our external stake-
holders and from our own perspective. In the same way, the triangle at the
intersection of the two axes represents the themes with the least relevance
for our stakeholders and ourselves.
The themes are marked accordingly and split into five areas of focus. These
are the core themes of our sustainability reporting. The following sections
center on the core themes mentioned here.
The five core themes of our sustainability reporting:
› Responsible value creation
› Responsibility toward the environment
› Responsibility toward our employees
› Responsibility toward society
› Responsibility for compliance
62 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
The top right-hand corner of the chart shows that the themes of energy
efficiency and emissions, as well as occupational health and safety, are
particularly important in our industry. Looking at the aspects with medium
relevance, a high proportion are key themes examined by external audit
agencies such as EcoVadis.
In this financial year, we achieved “Silver” level in the annual EcoVadis
assessment for the first time. We scored 46 out of a possible 100 points,
putting us above the average of 42.4 points for all companies audited by
EcoVadis. In the relevant pharma supplier and medical technology sector,
Gerresheimer is among the top 25% of the companies audited by EcoVadis.
RESPONSIBILITIES, RULES AND PROCESSES, CONTROLSThe Management Board of Gerresheimer AG adopted the revised CSR strat-
egy and assigned the corresponding responsibilities in May 2018. The Group
Senior Director Communication and Marketing was given responsibility for
implementing the CSR strategy. Consequently, he reports to the Management
Board several times a year on the progress of CSR strategy implementation.
Given that achievement of our sustainability targets and compliance with
sustainability rules are part of our everyday business processes as well as
among the responsibilities carried out as a matter of course by management
and all employees, no separate incentive system exists for this (for example,
within bonus arrangements) for the Management Board, management or
employees. Moreover, there are currently no plans to introduce such a system.
Continuous improvement of all operating activities at Gerresheimer is an
integral part of the Gerresheimer Management System (GMS). The funda-
mental sustainability targets and processes are defined in the Gerresheimer
Management System. Based on this system and following the usual allocation
of responsibilities, responsibility for achieving targets and complying with
processes—including in the area of sustainability—lies with the managers
of the divisions and plants and with department heads. Our sustainability
targets are monitored and audited as part of the regular GMS evaluations
of plants and locations and the audits of suppliers.
Business excellence
In our vision, we have set our sights on becoming the leading global partner
to our customers: “Our success is driven by the passion of our people.”
The Gerresheimer Management System represents one of the paths to
attaining that vision. GMS has been used to set Group-wide standards as
well as to define methods and tools to sustainably implement continuous
process improvement at every link in the value chain while establishing lean,
resource-light production as well as rigorous quality and customer focus.
GMS is therefore the overarching management system which enables us
to implement our CSR strategy and CSR targets—along with many other
operational themes—in the form of operational measures. The four system
components of GMS—employee systems, material systems, quality systems,
and methods and tools—create the framework and provide the standards
and tools required to embed the relevant aspects defined by the CSR-RUG
in our production locations and implement specific measures.
Our plants break down strategic targets into quantifiable location and
department targets. These are then linked via performance indicators to
process parameters and variables. In this way, the methods and tools available
in GMS can be prioritized for each location and implemented accordingly.
As employees play a key role in implementation, the GMS training is subject
to ongoing development.
The success of GMS is based on its acceptance, universal adoption and im-
plementation at all organizational levels throughout the Group. We develop
and define plant-specific plans for improvement as part of the operational
and strategic planning process. Drawing on operational excellence indicators
and a standardized evaluation system (GMS Performance Evaluation), we
regularly measure and evaluate the implementation status and maturity of
the standards set.
The GMS performance evaluation process is defined at Gerresheimer Group
and plant level. A detailed description of the process and the schedules to
be followed is provided in the “GMS Performance Evaluation Guideline”
document. Each plant is required to carry out a self-assessment at least once
a year as part of the GMS Self Performance Evaluation. The concept of the
Self Performance Evaluation is to ensure a higher level of acceptance and
individual responsibility at the plants. Based on a priorities model, external
GMS performance evaluations are also conducted at selected plants each
year with the participation of the global Business Excellence department
and GMS auditors from other locations.
All GMS performance evaluations are carried out by trained GMS auditors.
Each external GMS Performance Evaluation is planned and headed up by a
GMS Lead Auditor. To this end, as of November 30, 2018, 126 employees
have been trained as GMS auditors and are actively involved in the long-term
implementation of the system as part of the evaluation process. These com-
pany-trained auditors are linked up in a network and provide an outstanding
basis for individual responsibility within the plants, sharing solutions between
plants and divisions as well as for intra-Group expert consultation.
The evaluation is conducted based on a standardized catalog of 287 ques-
tions and clearly defined assessment stages, ensuring that the current
implementation status is objectively evaluated. As part of the evaluations,
quality processes, Human Resources processes and the core elements of
the Gerresheimer sustainability strategy enshrined in the GMS, including
“Corporate responsibility” and the “Principles of responsible supply chain
management”, are taken into account, alongside process optimization tools,
waste elimination and continuous improvement.
Based on their evaluations, recommendations are drawn up and action
plans devised for each location to ensure selective, ongoing improvement.
63GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
Following on from the publication and roll-out of the new generation of the
Gerresheimer Management System—GMS 3.0—in the financial year 2017,
the new generation of the GMS evaluation system—GMS Performance
Evaluation 3.0—was finalized and launched in the financial year 2018.
The new version of the evaluation system adds the evaluation components
“objectives and scope” and “expected conduct” to the already existing
“method” and “results” components. In addition, the questions themselves
and the evaluation criteria were reviewed and amended. These fundamental
changes to the system content were carried out by an international team
of experts from throughout the Group. The evaluation system was also
migrated to a new digital platform. In addition to performing evaluations,
documenting any variance and recommendations as well as developing and
tracking action plans, the program also enables all locations to benchmark
themselves against other plants. Overall, this leads to improved transparency
regarding the respective status and further progress of the system as a whole.
Sixty-five participants from eleven countries came to this year’s annual
GMS conference to discuss recent developments in GMS in presentations,
workshops and plant visits, set up and expand networks as well as exchange
implementation experience and success stories.
Enterprise-wide learning by linking experts and sharing successful solutions
within and between locations is a key goal of GMS. In order to promote and
facilitate this collaboration, GMS experts worldwide work and communicate
using our new social collaboration platform and discuss current themes
and solutions in web meetings, GMS round tables, at least once a quarter.
RESPONSIBLE VALUE CREATION
PROCUREMENTIn the financial year under review, the Gerresheimer Group’s cost of materials
(including raw materials, consumables and supplies, energy costs, packaging
materials and purchased services) was EUR 517.5m (prior year: EUR 489.2m).
The procurement rate—the cost of procuring materials as a percentage of
revenues—thus stood at 37.8%, above the prior-year rate of 36.3%. As
our divisions deploy different production technologies and production is
distributed worldwide across Europe, North America, South America and
Asia, our procurement is largely decentralized. Energy and goods or services
not relevant to production, such as access to data networks as well as
hardware and software, are largely sourced centrally.
Our interactions with suppliers are governed by the Gerresheimer Compliance
Program as well as by purchasing policies and procedural guidelines. It is
also extremely important for us that our suppliers comply with the high
quality and sustainability requirements of our business. When selecting
strategic and important suppliers, we look for those who are certified in
accordance with the relevant ISO standards and also comply with the guide-
lines on quality assurance in the production of drugs and active ingredients
(good manufacturing practice). We ensure that our suppliers adhere to the
Gerresheimer Principles for Responsible Supply Chain Management (available
on our website at: www.gerresheimer.com/en/company/corporate-social-
responsibility/customers-suppliers). In addition to key precepts relating to
occupational health and ethical business conduct, this also addresses the issue
of environmental protection. For example, our suppliers must adhere to all
applicable environmental regulations and must have implemented systems
that ensure safe management of waste, emissions and wastewater and that
prevent and minimize chance or accidental contamination and releases into
the environment. Of our strategic suppliers, 186 (22%) have also agreed in
writing to comply with these principles. Since the Gerresheimer Principles for
Responsible Supply Chain Management represent a key factor in agreeing
and formulating our requirements for our suppliers, we plan to increase this
percentage even further in the coming financial year. In addition, we intend
to further enhance understanding of sustainability in the supply chain by
providing training to employees in procurement in the next financial year.
Our selection process requirements for new suppliers and the continuous
review of supplier performance are set out in the “Supplier quality procedures”
section of the Gerresheimer Management System and are thus applicable
for all locations worldwide. At the start of this process, suppliers undergo a
standard classification procedure to ensure that notably our strategic suppliers
act in accordance with our quality and sustainability requirements. Strategic
suppliers are suppliers from whom we obtain materials or services that are
used directly in our products during processing, or that could have a material
influence on the quality of the end product. As of November 30, 2018, we
had defined 836 strategic suppliers worldwide, from whom we procured
around half of our total procurement volume during the financial year.
New suppliers are subject to a qualification process before they are approved
to supply materials or services. In addition to providing information by
responding to a questionnaire, the qualification process for strategic suppliers
involves an on-site audit. Around 70% of our locations already include
environmental and social requirements in this qualification process. To ensure
a sustainable quality level in procurement and the continuous improvement of
supplier performance, all strategic suppliers undergo an annual performance
review, and supplier audits are carried out at regular intervals. Environmental
and social evaluation criteria likewise form part of this annual review.
64 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
Our “Gerresheimer Principles for Responsible Supply Chain Management”
also specify that a supply contract will be terminated with immediate effect
if it is determined that a supplier willfully conducts, practices or endorses
(i.e. internally or through sub-contractors) one or more of the actions for
which standard definitions are provided below:
› Deliberate falsification of information required by the procurement function
› Use of forced or slave labor or penal labor
› Use of child labor
› Inhumane treatment of employees or acceptance of sexual abuse, physical
punishment or physical coercion of employees
› Knowingly supporting corruption, extortion, fraud, bribery or other criminal
activities
› Deliberate and repeated massive violations of environmental protection and
occupational health and safety that endanger employees and/or society.
As a manufacturer of high-quality primary pharma packaging, our molded
glass plants use quartz sand, soda and soda lime as raw materials to
make glass, along with other additives in relatively small quantities. These
basic products are freely available, and we procure them from a range of
suppliers. There were consequently no disruptions to supply or shortages
with a signifi cant impact on our business development in the reporting
period. Making glass also requires the use of large quantities of energy,
mostly in the form of gas and electricity. Some customer contracts provide
for automatic adjustment after a specific time when energy prices change.
As our contracts with pharmaceutical glass container and cosmetic glass
customers rarely carry an agreed term of more than two years, adjustments
for any changes in energy prices are generally made where necessary when
agreements are extended. We minimize any residual risks as far as possible
using hedges (see “Operational Risks”).
The production of plastic primary pharmaceutical packaging and of complex
drug delivery systems like insulin pens and inhalers requires energy and above
all special resins made from polyethylene, polypropylene and polystyrene, for
example. These basic products are also freely available and procured from
a range of suppliers. Here, too, there were consequently no disruptions to
supply or shortages with a significant impact on our business development
in the reporting period. The purchase prices for resins depend, to a large
extent, on the world market price for oil. In our contracts with customers for
plastic pharma packaging and drug delivery devices, we therefore generally
include provision for adjustments when resin and energy prices change so
as to minimize the risk of price changes in these basic products.
Where we use or purchase minerals such as tin, tungsten, tantalum or gold
(so-called “conflict minerals”) or their derivatives to produce or finish our
products, the supplier in question must provide certificates demonstrating
that these raw materials have been properly obtained. In this way, we have
proof that our suppliers have not obtained the raw materials from countries
that finance armed conflict and contribute to human rights violations by
mining and trading in them. This is clearly specified in both our corporate
responsibility guideline and our procurement code, and we are very careful
to ensure we meet this obligation.
We use tungsten and tin in the production process at some of our plants,
while gold is used as a finishing material. Tin is a component of tin chloride,
which our molded glass plants use for the surface finishing of glass containers
in order to improve the quality of the glass. Our cosmetic glass plants in
Tettau (Germany) and Momignies (Belgium) use gold to decorate flacons
and pots. At the request of customers, our Mexican plant in Queretaro uses
gold enamel paint to finish cosmetic ampoules. The Queretaro plant also
produces syringes, for which a tungsten pin is used to form the cone. This
similarly applies to our German syringe plant in Buende.
PRODUCTIONThe same exceptionally high quality standards that are applied in the produc-
tion of drugs also apply to the production of primary pharma packaging. Our
in-house experts, our customers, external appraisers and supervisory bodies
regularly verify our compliance with these standards, which are grouped
under the heading of good manufacturing practice. Whatever form the
production processes in the two divisions Plastics & Devices and Primary
Packaging Glass, the principles of the Gerresheimer Management System
(see “Business Excellence”) and the requirements of the Gerresheimer quality
initiative (see “Quality Management”) apply at every Gerresheimer plant
worldwide. This is how we ensure that management systems and quality
standards stay uniform.
Each division’s production capacities are generally planned centrally based on
the order situation, delivery deadlines and regulatory issues, and distributed
among the plants in each division at a regional or global level in line with the
orders on hand. Efficiency and optimum capacity utilization are instrumental
here. Notably in the Primary Packaging Glass Division, high capacity utilization
in molded glass plants is crucial to profitability because these production
processes involve melting various raw materials into glass in energy-intensive
furnaces. Another key profitability factor is minimizing idle time. Set-up times
indicate how long it takes to retool for the next product to be manufactured.
In particular in our Primary Packaging Glass Division, we have continuously
improved over the last few years in terms of optimizing furnace capacity
utilization and reducing set-up times. Given the large number of different
products in this division, this is a decisive competitive advantage. It also has
a positive impact on energy consumption and thus on CO2 equivalent (CO2e)
emissions (see “Our responsibility toward the environment”).
Security of supply and delivery reliability are critical factors for the pharma
industry. Accordingly, we use standardized—or at least comparable—tech-
nologies at all plants worldwide and consistently apply our GMS. This has the
advantage that many of our products can be produced at another site if local
production bottlenecks arise. As a result, our customers enjoy significantly
enhanced security of supply—and we enjoy a critical competitive edge. As
part of our global machine strategy, we are equipping all our injection vial
production plants worldwide with the same state-of-the-art machinery. This
will enable us to supply our customers with improved injection vials that
meet the highest quality standards from any of our sites. After completing
machinery upgrades in the US and Mexico in 2016, the focus in 2017 and
2018 was on Europe and Asia, and we were already able to start producing
and shipping products made with the new machine generation in China in
the financial year under review.
65GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
MARKETING AND SALESAt our 38 production plants worldwide, we produce more than 15bn injec-
tion vials, ampoules, cartridges, containers for liquid and solid medicines,
insulin pens, pen and micro pump systems, inhalers, syringes and cosmetic
containers each year. Our packaging comes into direct contact with the
medication or cosmetic product and is therefore also referred to as primary
packaging.
Our customers are mostly companies in the global pharma and healthcare
and cosmetics industries, with 82% of our revenues being generated in the
pharma and healthcare sector. We not only supply customized packaging,
but also provide pharma companies with cost-effective and flexible solutions.
One example of this is the prefilled disposable syringes, which significantly
reduces the time needed to prepare the injection and avoid dosage errors.
As a syringe manufacturer, we include the full pretreatment of syringes
in our service. This includes washing and siliconization of the glass body,
mounting and protecting cannulas, and responsibility for sterilization. The
pharmacists’ expense is reduced to filling and adding plunger heads and
plunger rods. We often work together with packaging and process specialists
on the customer side at the early stages of development in order to establish
a high-quality, optimally harmonized overall concept for the medication,
packaging and system design.
Although we do not sell directly to patients or end users, these individuals
generally come into contact with our products. The primary functions of our
packaging solutions are to protect the medication or other filling contents,
to improve delivery and ease of use as well as to ensure accurate dosage.
In many cases, packaging is an integral system component, without which
many drugs would be less user-friendly and cost-effective. Patient safety is
always of the utmost importance for us. Therefore, in addition to sustain-
ability aspects—including both social and environmental issues—our top
priority is ensuring high quality at every link in the value chain, from the
raw materials producers to delivery of orders.
We supply our customers in the pharma and cosmetics industries either
directly or through wholesalers. Furthermore, our US subsidiary Centor mar-
kets its products to pharmacies. In addition to our own high standards with
regard to quality and sustainability, we are, as a supplier to the pharma and
cosmetics industries, also subject to these companies’ stringent requirements.
As such, we are regularly reviewed by our customers in supplier audits and
we must comply with customer-specific requirements. Moreover, partici-
pating and achieving particular results in the Carbon Disclosure Project is a
prerequisite for having a supplier relationship with certain customers. More
information about this can be found under “Climate-relevant Emissions” in
this Group Management Report.
Creating customer loyalty and gaining new customers are at the heart of our
marketing and sales strategy. To this end, our sales staff maintain ongoing
contact with existing customers and develop new customer relationships.
Talking directly with our customers is just as important as our participation
in numerous trade fairs in Europe, the Americas and Asia. We keep our
customers and potential customers regularly informed, for example, through
newsletters, catalogs and brochures as well as on a constant basis through
details of our products and services provided on our website.
We regularly conduct global surveys with the aid of a respected market
research institute to gauge customer satisfaction among both current and
potential customers. Our aim in this is to gain a more in-depth understanding
of customer needs, and thus to enhance customer satisfaction and loyalty. For
this purpose, we carry out a standardized online survey, which is available in
ten different languages. Insights gained are leveraged to improve customer
service and derive specific recommendations for process optimization.
The survey is conducted Group-wide, covering our operating companies—
together with their respective customers—in Argentina, Brazil, Mexico and
the US as well as our European plants and our locations in China and India.
In particular, the survey focuses on our development work, the product
portfolio, customer-specific system solutions, order processing and logistics,
the expertise and dedication of our sales staff as well as our technical support
and complaints handling. Our customers’ responses highlight focal areas
that are especially important to them—both where they are already satisfied
with our performance and in what areas we need to improve. To learn even
more about our customers and the market in general, we have supplemented
our survey to ask customers for their relative opinion of the competition.
Following the worldwide surveys in 2011, 2013 and 2016, the next is planned
for 2019. The findings of the most recent global survey are being put to use
in order to drive continuous improvement measures across all divisions and
plants. Regularly conducting our Group-wide global customer satisfaction
survey gives us an ongoing insight into customer wishes as well as an
assessment of our products and services. In the process, we also comply
with the requirements of the ISO audits and our own guidelines under
GMS. This means the surveys additionally allow us to track over the years
whether improvements made from one survey to the next were successful
and whether they made a difference for customers.
66 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
OUR RESPONSIBILITY TOWARD THE ENVIRONMENT
We strongly believe that acting in a manner that is responsible and environ-
mentally aware will enhance our results over the medium and long term.
Our continued aim is to use our raw materials and resources as efficiently as
possible, and to avoid producing materials that are damaging to health or
the environment. Environmental protection and the threat of climate change
are our impetus for continuously improving our energy, consumption and
emissions management; this is enshrined accordingly in our Gerresheimer
Management System. GMS provides our subsidiaries with standard methods
and tools to ensure and continuously develop low-waste and low-emission
processes along the entire value chain. In this way, we implement our environ-
mental targets in all plants. We strictly adhere to prevailing environmental
regulations worldwide.
As a manufacturing enterprise that uses large amounts of energy to pro-
duce its products, especially for the manufacture of glass containers, our
respon sibility toward the environment has for many years centered on
efficient energy consumption and the avoidance of emissions, particularly
CO2e emissions. Consequently, since the financial year 2008, we have set a
CO2e emissions target, which is verified through our participation in one of
the world’s largest environmental initiatives, the Carbon Disclosure Project
(CDP). We also publish the targets set and their achievement. As a key
element of our CSR strategy, achievement of our CO2e emissions targets
as part of our participation in the CDP is also reviewed annually by the
Management Board.
Energy efficiency and emission avoidance play a major part in environmental
protection. In parallel with this, we develop environmentally friendly products
using both glass and plastic, which we offer to our customers.
The measurement of our CO2e emissions, water consumption and waste
levels was previously based on the CDP’s submission deadline, which differed
from our financial year. The data is collected globally for the CDP in the spring
for the previous year. Consequently, up to now the data reviewed and pub-
lished by the CDP was always one financial year behind in the non-financial
Group declaration in our Group Management Report. This is also the case
in the current Annual Report, meaning that the CO2e emissions, water
consumption and waste figures for the financial year 2017 are presented.
The measurement process will be completely overhauled for the coming
financial year, bringing it into line with our financial year going forward.
We use the operational control approach to consolidate our greenhouse
gas emissions. We solely report on our production locations, including the
adjacent office buildings, and the Head office in Duesseldorf; this also applies
to our figures for water consumption and waste. Further information on
the emission factors and the methods used are published annually as part
of our participation in the CDP.
CLIMATE-RELEVANT EMISSIONSWe measure, analyze and manage our CO2e emissions at all production
locations, and report annually on their composition and any changes that
have occurred as well as various measures adopted to reduce CO2e emissions.
Our key environment strategy target is to reduce the ratio of Scope 1 and
Scope 2 emissions to revenues. This means that our revenues are to grow
faster in the future than the unavoidable Scope 1 and Scope 2 CO2e emissions
produced in revenue generation, so that we achieve a significant improvement
by 2023. Having met this target in seven consecutive financial years, we
failed to achieve it for the first time in the financial year 2017. Although
our Scope 1 and Scope 2 emissions were reduced by a further 0.2%, the
relatively marked reticence of our major pharma customers led to a 2.0%
decline in revenues, meaning that the ratio of emissions to revenues increased
slightly for the first time.
Ratio of emissions to revenues
20092008 2010 2011 2012 2013 201720161)20151)2014
0.500
0.400
0.700
0.600
0.800
1) Excluding the Life Science Research Division (sold as of October 31, 2016).
In the financial year 2017, our direct greenhouse gas emissions (Scope 1)
totaled 258,527 tons of CO2e, while location-based indirect energy-related
greenhouse gases (Scope 2) came to 295,164 tons of CO2e. Applying the
market-based approach, the Scope 2 emissions amounted to 304,016 tons
of CO2e. Compared with the financial year 2016, we were able to reduce
our Scope 1 and Scope 2 emissions by a total of 1,198 tons of CO2e in the
financial year 2017.
A large proportion of our Scope 1 and Scope 2 emissions can be traced
back to our fuel and electricity consumption and the energy consumed for
heating and cooling. In the financial year 2017, energy consumption from
non-renewable sources such as natural gas, liquid natural gas, diesel and
light fuel oil (Scope 1) amounted to 3,620 terajoules (2016: 3,574 terajoules,
2015: 3,570 terajoules). In addition, electricity and heating (Scope 2) totaling
2,226 terajoules was used (2016: 2,238 terajoules, 2015: 2,305 terajoules).
Accounting for around a third and around half, respectively, of all emissions,
combustibles and purchased electricity were the largest sources of Scope 1
and Scope 2 emissions.
CO2e emissions (Scope 1 & 2)
relative to revenues (t/EUR k)
67GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
We have measured some of the upstream and downstream indirect green-
house gas emissions (Scope 3) in the value chain since the financial year
2015. These include emissions from the purchase of the raw materials resin
and glass tubing, as well as emissions from upstream power generation. We
were also able to report significant emission reductions in this area, where
we are able to exercise only limited influence.
Our results at a glance:
Carbon Disclosure Project 2008 to 2017
2008 2009 2010 2011 2012 2013 2014 20151) 20161) 2017
CO2e emissions (Scope 1 & 2) in tons (t) 760,076 716,702 733,576 775,372 825,235 817,097 672,624 567,451 554,889 553,691
Revenues in EUR m 1,060.1 1,000.2 1,024.8 1,094.7 1,219.1 1,265.9 1,290.0 1,282.9 1,375.5 1,348.3
CO2e emissions (Scope 1 & 2) relative to revenues (t/EUR k) 0.717 0.717 0.716 0.708 0.677 0.645 0.521 0.442 0.403 0.411
CO2e emissions (Scope 3) in tons (t)2) 419,620 408,196 401,084
1) Excluding the Life Science Research Division (sold as of October 31, 2016).2) Statistics collected since the financial year 2015.
We have launched further optimization measures within the context of the
CDP. For instance, we have improved the CDP verification criterion in recent
years. Our activities and data are checked by the TÜV inspectorate and
certified to ISO 14064-3. This also applies to the emission figures provided
to the CDP for the financial year 2017.
Further information and definitions are available at www.gerresheimer.com/
en/company/corporate-social-responsibility/carbon-disclosure-project and
www.cdp.net.
VEHICLE FLEETOur global vehicle fleet consists of 300 vehicles. Environmental aspects
are also a factor when stipulating requirements for company cars. To date,
most of our vehicles have been diesel-powered. These are currently under
review with regard to energy efficiency and environmental impact. As a
contribution to sustainability and environmental protection, only vehicle
models that have passed the ADAC EcoTest and gained a rating of at least
four stars are permitted. Models that have not been tested are not permitted.
In the procurement and operation of our vehicle fleet, we aim to adopt
the best available technology and reduce pollution. Our guidelines were
revised in 2016 to enable the purchase of hybrid or electrically powered
vehicles for our fleet.
ENVIRONMENTAL PROTECTION IN PRODUCTIONGlass melting operations in particular require the use of a lot of energy. This is
why we overhaul and repair the Group’s energy-intensive equipment, such as
the furnaces in our molded glass plants, as required. This enables us to install
cutting-edge glass-melting technology and modernize production systems
as a whole. As a result, we consistently achieve improvements in energy
efficiency through furnace upgrades. Major renovation work was carried out
at our plant in Kosamba (India) in 2018. The change from an open gas-fired
system for the working end and two feeders to a closed electric heating
system has reduced the energy used per ton of glass by almost one-fifth and
significantly increased efficiency. At the same time, the improved chemical
and thermal homogeneity of the melted glass has improved the quality of
the pharmaceutical products manufactured. A smaller-scale furnace overhaul
was also carried out at our US plant in Chicago Heights (Illinois/USA) in 2018.
Significant reductions in energy consumption and CO2e emissions per ton of
melted glass were also recorded at our cosmetic glass plant in Momignies
(Belgium), in 2018 mainly due to the overhaul of a furnace in 2017. Next year,
we will make further major advances in the area of energy efficiency at our
German plant in Essen thanks to a new flint glass furnace: The furnace that
dates back to 2007 is to be replaced by a modern state-of-the-art furnace.
A new higher-performance decoration center, which focuses on UV printing,
went into operation at our cosmetic glass plant in Tettau (Germany) in the
financial year 2018. Although the new decoration center has considerably
higher capacity, the number of firing and drying kilns has been reduced from
three to two, thereby also lowering emissions. We have also developed new
protective packaging for glass flacon necks together with a customer at our
Tettau plant. In addition to normal cardboard packaging, in the past a film
was used to protect the vial necks from dust. The new coated cardboard,
which provides the same level of hygiene as the film, means that the film
material and a mechanical unpacking task are no longer required. The coated
cardboard is fully recyclable without dissolving the coating.
In Haarby (Denmark) and Boleslawiec (Poland), the replacement of com-
pressors significantly reduced the energy required for the injection molding
process. In Vaerloese (Denmark) and Pfreimd (Germany), the refrigeration
units and air-conditioning systems have used only environmentally friendly
coolants since 2018. By packaging vials according to a regular packing
pattern instead of loosely in plastic bags, we have been able to fit at least
20% more vials in each cardboard package at the Haarby plant and thus
saved on plastic bags, cardboard and transport.
68 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
We also use renewable energy to meet our plants’ energy requirements.
One example is our plant in Kundli (India), where some of the energy used
in making plastic pharma packaging is provided by solar power. At our
plant in Buende (Germany), a combined heat and power (CHP) plant helps
reduce primary energy consumption and CO2e emissions. The CHP plant is a
cogeneration system producing electricity and heat on a decentralized basis.
Energy use for lighting is a key factor at many sites. We are thus replacing
old bulbs and tubes with energy-saving LEDs in many plants and exploring
the use of LED lighting in all building conversions and extensions. Completely
changing over to LED technology saved around 80 MWh at each of our
plastic plants in Kundli and Haarby in 2018. In many cases, areas that are
not in use all the time, such as store rooms, have been fitted with presence
sensors that turn off the lights when nobody is there.
Certification of our production plants is hugely important to us as a means
of documenting our environmental progress. All certification is subject to
regular review and renewal at fixed intervals. Training on energy efficiency
and environmental protection is provided at all plants as a matter of course.
Thirteen of our 38 production locations have been certified for state-of-the-
art environmental management and responsible use of natural resources
in accordance with ISO 14001. Of these locations, twelve underwent
re-certification under this standard in the reporting year. Due to the more
rigorous standards, continuous improvement of energy performance must be
demonstrated. The target for the next financial year is to receive ISO 14001
certification for the three German molded glass locations that have not yet
achieved this.
The development of an effective energy management system to ensure
we make the most of opportunities to reduce energy consumption and
further improve energy efficiency is also a priority for us. So far, eleven of
our 46 Gerresheimer locations have received the corresponding ISO 50001
certification. In 2018, five of these locations were re-certified in accordance
with ISO 50001.
In the Medical Systems Business Unit, ISO 14001 (environmental manage-
ment) and ISO 50001 (energy management) certification has been supple-
mented by introducing a global operational safety management system.
This covers environmental protection, occupational health and safety, fire
prevention and energy management, and anticipates the introduction of
ISO 45001 (future occupational health and safety management system). All
plants in this business unit are managed via recently introduced software,
with requirements and targets for saving energy and cutting CO2e emissions.
Employees have online access to the relevant modules and are required to
immediately report, document and track the elimination of any environmental
damage. Suppliers and other visitors receive training via an online link and
must demonstrate that they have participated. All employees and visitors
are required to contribute to achievement of the corresponding targets.
In addition to knowledge transfer within the Gerresheimer Group, regional
and industry organizations play an ever more important part in matters of
energy efficiency and environmental protection. The molded glass plant in
Essen (Germany), for example, is a member of the Ökoprofit platform. This
is a collaborative project between local authorities and local business aimed
at reducing operating costs while conserving natural resources—notably
energy and water. The Federal Association of the German Glass Industry
(BV Glas), of which we are a member, has joined a German government
initiative to create energy efficiency networks and founded the industry-wide
“Rennsteig-Energie” network, of which our cosmetic glass plant in Tettau
(Germany) is a member. Each individual company aims to leverage new
energy saving potential through regular exchanges within the network, as
well as uniform targets and audits.
ENVIRONMENTALLY FRIENDLY PRODUCTS AND USE OF NATURAL RESOURCESAvoiding, properly recycling and correctly disposing of plastic waste is a
crucial environmental target, with the pollution of the oceans currently
at the heart of the environmental debate. By using materials in a way
that conserves resources, avoiding waste and developing new sustainable
products, Gerresheimer is working toward this global target. There are also
regulatory restrictions, such as the use of prescribed resins and approval
requirements, particularly for primary pharma packaging. Gerresheimer
has presented its first corresponding product innovations and is promoting
them to its pharma and cosmetics customers.
Under the BioPack name, we have launched a wide portfolio of plastic
packaging products for drugs and cosmetics made from biomaterial in
place of conventional polyethylene (PE) or polyethylene terephthalate (PET).
Instead of crude oil, biomaterials are made from renewable raw materials
such as sugar cane. Packaging made from biomaterials is fully recyclable,
has the same properties as conventional packaging and can be used on
existing filling and packaging lines.
At the request of a major cosmetics customer, in 2018 we developed an
innovative plastic bottle for a hair care product made from 100% natural
ingredients, with minimal plastic use and an indentation in the base that
allows it to be stacked. This enables more efficient transport packaging,
which in turn leads to lower CO2e emissions. The environmentally-friendly
concept extends to the bottle being able to be refilled three times at the
hairdresser in order to reduce waste volumes and energy consumption.
69GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
Our US subsidiary Centor supplies pharmacies with recyclable plastic con-
tainers to package prescription drugs. Centor also produces oval bottles and
vials from fully recyclable PET. Available in various sizes, these are used by
pharmacies to fill and package liquid medicines. Furthermore, Centor does
not use additional plastic bags when sending small numbers of closures
and containers for tablets. This saves material and reduces the impact on
the environment.
In the production of pharma jars and glass cosmetics packaging, large
quantities of recycled glass (cullet) are used as a substitute for raw materials.
This is sourced out of the Group’s own internal material cycle and, subject to
controls, from household recycling. Cullet is deployed where it is available
in suitable quantities, there is no compromise to end product quality, and
there are no pharmaceutical or cosmetic regulatory requirements to restrict
its use. In spite of the restrictions mentioned, our cosmetic glass plant in
Momignies (Belgium) increased the proportion of cullet in 2018, thereby
reducing energy consumption.
As well as having our own, internal cullet cycle, we work with suppliers such
as glass tubing producers. This enables us to return borosilicate glass cullet
from our glass molding process to glass tubing producers who then use this
to make new borosilicate glass tubes. As a result of a project to increase the
collection rate of borosilicate glass cullet, which was successfully implemented
by the Morganton (North Carolina/USA) production location in 2017, cullet
volumes at this plant were increased by 50% in 2018, as in 2017.
WATER CONSUMPTION AND WASTELike CO2e emissions, the figures published for water and waste relate to the
financial year 2017 (as explained above). These statistics were collected in
the financial year 2017 for the first time.
Our water consumption amounted to 825,435 cubic meters in the financial
year 2017. Regionally, Europe accounted for the largest share of water
consumption. The Primary Packaging Glass Division accounted for the biggest
share of total consumption. Of the total volume in 2017, 69% came from
the municipal water supply or other public or private water companies. Other
sources were groundwater (24%) and surface water (7%).
Water is mainly used in glass production to cool down waste and clean
cullet or finished products. For example, acid-etched glass packaging must
be cleaned after it is taken out of the acid bath. The use of fresh water
can be reduced here by using water treatment systems. Consequently, the
cosmetic glass plant in Tettau (Germany) installed a new circulatory system
in the financial year 2017 to reduce water consumption levels in the future.
Water is used to cool the machinery and compressors used in the production
of plastic packaging. The intensity of use here primarily depends on the type
of plastic used. For example, PET resin is melted at higher temperatures,
which means that more water needs to be used for cooling than when
polyethylene or polypropylene are used.
Waste prevention plays an important role at all our plants. We collected data
on the volume of waste for the first time in the reporting year. Since the
German locations must report their waste volumes externally and reporting
processes have already been implemented, we are initially only reporting
the waste volumes of our German locations. In the financial year 2017, this
totaled 26,957 tons of waste, of which 1,933 tons were hazardous waste.
OUR RESPONSIBILITY TOWARD THE EMPLOYEES
Our employees are the bedrock of our business success. Their passion,
willingness to take on responsibility and motivation pave the way for attain-
ment of our long-term goals. This conviction is embodied in our vision and in
our guideline on corporate responsibility. Our global human resources strat-
egy provides the framework for the numerous activities and arrangements
in place at our locations and is consequently a key strategic success factor.
As a global Group operating in a dynamic environment, we aim to provide
our workforce with ongoing development opportunities, protect their health,
ensure their safety in the workplace and promote diversity. Our decentralized
human resources functions embrace the diverse cultures and beliefs across
our workforce at all locations, in 15 different countries. Gerresheimer’s
corporate values—integrity, responsibility, excellence, teamwork and inno-
vation—guide our future-oriented actions.
Human resources systems form a major part of the Gerresheimer Manage-
ment System, which ensures implementation of the global human resources
strategy in our operating units. They establish Group-wide standards,
methods and instruments for employee development, leadership and par-
ticipation. Occupational health and safety systems are a key element here,
especially at our manufacturing locations.
Thanks to a wide variety of factors, including our open corporate culture
and diverse employee development activities, Gerresheimer was named by
Focus magazine as a “top national employer” in Germany in 2018 for the
fourth time, having previously received the honor in 2014, 2016 and 2017.
70 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
WORKFORCE STRUCTUREThe Gerresheimer Group had 9,890 employees as of the end of the financial
year 2018 (prior year: 9,749). This represents an increase of 1.4% on the
2017 financial year-end.
Gerresheimer Group employees
Number
201820122011 2013 2014 2015 2016 2017
12,000
10,000
8,000
6,000
4,000
2,000
0
11,09611,239
9,74910,21210,952
9,90410,684
9,890
In 2018, 2,248 employees left the Company (prior year: 1,716 employees).
The main reasons for departure were the expiration of temporary employment
contracts, voluntary termination of employment, termination by the Company,
termination of the employment relationship by mutual agreement, and
retirement. The average length of service is 11.6 years (prior year: 11.6 years).
Reasons for leaving the Group
In % (prior year)
Termination by the employer17.4 (15.8)
Termination by the employee 29.1 (35.4)
Mutual termination of working contract9.3 (9.4)
Expiration of temporary employment contract30.2 (24.9)
Retirement5.6 (5.9)
Disablement & death1.8 (2.3)
Others6.6 (6.3)
Average length of service by region
In years
18
15
12
9
6
3
0
2018 2017
Europe Germany Emergingmarkets
Americas
9.511.5
13.6 14.4
11.2 10.9 10.3 9.7
EMPLOYEES BY DIVISIONThe Primary Packaging Glass Division had 5,136 employees as of the end
of the financial year 2018 (prior year: 5,157). This corresponds to a slight
reduction of 0.4%. By contrast, the number of employees in the Plastics &
Devices Division increased slightly (by 1.1%) to 4,527 as of the 2018 financial
year-end (prior year: 4,479). Our new Advanced Technologies Division has
113 employees. There were 114 employees working at headquarters as of
the financial year-end (prior-year: 113 employees). Gerresheimer AG had
97 employees as of the reporting date (prior year: 98 employees).
Employees by division
Number
2018 2017
6,000
5,000
4,000
3,000
2,000
1,000
0
Primary Packaging Glass
Advanced Technologies
Plastics & Devices
Headquarters
114 113113 0
5,136 5,1574,527 4,479
EMPLOYEES BY REGIONWe produce in the regions where our customers and markets are located:
in 38 plants on four continents, with 1,882 employees in Europe (prior year:
1,858), 1,128 in the Americas (prior year: 1,024) and 3,361 in emerging
economies (prior year: 3,482). As a company with a long tradition in our
home market, we continue to have a large footprint in Germany. At the
end of the financial year, we had 3,519 employees at ten locations across
the country (prior year: 3,385).
Employees by region
Number
2018 2017
6,000
5,000
4,000
3,000
2,000
1,000
0
EuropeGermany Americas Emergingmarkets
3,519 3,385
1,882 1,8581,128 1,024
3,361 3,482
71GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
EMPLOYEES BY AGEThe average age of the Gerresheimer workforce is 41.3 years (prior year:
41.5 years). Among female employees the average age is 41.7, while
among male employees it is 41.1. The highest average age is at our
American locations, at 43.3 years. In contrast, the average age of our
employees in emerging markets is below 40.
Average age of workforce by region
In years
50
40
30
20
10
0
GermanyEurope Americas Emergingmarkets
38.943.342.041.5
APPRENTICESHIPS, CAREER ENTRY AND EMPLOYEE DEVELOPMENTIn line with our values-driven corporate policies and against the backdrop
of demographic change, we see vocational training as part of our corporate
social responsibility. Specific training requirements are taken into account in
each business unit. Our training programs prepare young employees for their
future responsibilities. In 2018, we offered a total of 15 training occupations
in Germany, ranging from mechatronics fitter to combined training as foreign
language correspondent and industrial clerk. As of November 30, 2018,
Gerresheimer employed 188 trainees (prior year: 155 trainees) in Germany.
The training rate in Germany was 5.3% (prior year: 4.6%), which is slightly
above the 5.2% industry average. We took on 95.2% of the 42 trainees
who completed their training with us in the financial year 2018 (prior year:
65.0%). The financial year 2018 also saw the launch of our training pro-
gram with three trainees at our location in Peachtree City (Georgia/USA)
in collaboration with a regional college. For several years now, we have
additionally provided training modeled on the German dual training system
at our plant in Horsovsky Tyn (Czech Republic).
Many of our plants use the national “Girls’ & Boys’ Day” in Germany or
open days to provide information about training opportunities and co-op
education programs. This creates an opportunity for interested school stu-
dents and high-school graduates to talk to current trainees and employees.
Locations in our Medical Systems Business Unit also take part in the SET
(Schüler entdecken Technik = schoolchildren discover technology) project,
which aims to get schoolchildren interested in technology from an early age.
Training rate
In %
201820122011 2013 2014 2015 2016 2017
6
5
4
3
2
1
0
5.35.5
4.65.3
5.0
5.9 5.86.1
Subsequent employment of trainees and students
Number
25
15
20
10
5
0
2
2119
Permanent employment
Limited employment
No employmentat request of the apprentice
In addition, we offer ten co-op education programs, such as a Bachelor of
Engineering with an industrial engineering major. We employed 31 co-op
students in Germany in 2018 (prior year: 28 students). These programs
provide a balanced combination of theory and practice. A graduate at our
Regensburg (Germany) plant was conferred the “Best Masters Graduate”
Bavarian culture award. The German Association of Plastics Converters
(GKV) also once again awarded a stipend to a trainee and a co-op student at
Gerresheimer Regensburg GmbH. Including the 2018 stipend winners, a total
of 13 trainees and co-op students have received stipends at Gerresheimer
Regensburg GmbH since 2001.
The first three trainees in our “GxGo!” trainee program successfully com-
pleted the program in the financial year 2018. All three were taken on in
their respective units. The second iteration of the global trainee program
starts in the financial year 2019.
For the attainment of our human resources goals and to secure our long-
term success—and in addition to our training programs—we constantly
invest in the professional, methodological and personal development of
our workforce. In this connection, we always aim for compatibility between
our corporate goals and individual career aspirations. To this end, we offer
coaching, training and development programs worldwide. Furthermore,
72 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
employees in management positions are able to take part in custom- tailored
development programs in order to prepare them for the current and future
challenges of their roles. For executive management, we provide our “Leader-
ship Powered by Values” program, a five-module, long-term, mandatory
management training course based around our five values of integrity,
responsibility, excellence, teamwork and innovation. Employees from pro-
duction (“Leading Blue”) and non-production areas (“Leading White”) can
take part in management training tailored to their specific needs. As part of
our ongoing leadership training for executive management, and in parallel
to “Leadership Powered by Values”, we also continued the “Leadership
Journey”, where we focus on a different value selected each year. The
selected value in 2018 was “trust”. In the financial year 2017, to address
both the ever-higher demands placed on employees and people’s own
needs in terms of work-life balance, we developed “one Life”, a module for
employees of all units worldwide. Additionally, the “Quarterback Program”, a
custom-tailored “train-the-trainer program” for management development,
has been developed and rolled out in one business unit in order to meet the
particular needs of that unit. The value focused on in that program during
2018 was “teamwork”.
A total of 194,075 hours of further training were provided in the financial
year 2018, corresponding to 19.6 hours per employee. The Americas
accounted for 36.5% of training hours, followed by Germany with 36.4%,
the rest of Europe with 14.3% and emerging markets with 12.8%.
Appraisal interviews were held for a total of 4,980 employees in the financial
year 2018, representing 50.4% of all employees. As a rule, an appraisal
interview between employee and superior takes place once a year and covers
the employee’s performance in the preceding financial year, targets for the
financial year ahead and any development measures.
Looking ahead, Industry 4.0 and digitalization will result in the creation of
different jobs with new working environments, which will lead to changing
demands on the organization. As part of change management, global HR
Development continues to support the ongoing global rollout of a manu-
facturing execution system (MES) in the Primary Packaging Glass Division.
HR Development aims here to clearly present the nature of the changes and
to work with plants to develop a change architecture.
Another priority in change management is supporting the refinement of
leadership structures in production and the resulting consequences. The
purpose of this project is to further enhance work quality, product quality
and productivity. It aims to create and implement a framework for work
excellence and high product quality. Building on organizational and potential
analysis, the next step is to develop a target organizational structure and
specify the new job requirements profiles. The plants also work closely with
HR development during implementation of the new target structures and
beyond in order to permanently establish the changes.
DIVERSITY AND CORPORATE CULTUREGerresheimer fosters a culture of diverse beliefs, experiences and cultural
backgrounds, as is expressly embodied in our guideline on corporate respon-
sibility. Our 9,890 employees work in 15 different countries. The diversity
of these countries and cultures is also reflected within Gerresheimer. An
open and respectful corporate culture and the mix of different nationalities,
genders, education biographies, life experience and age groups are significant
factors contributing to our Company’s success. At Gerresheimer we have
created an inclusive working environment in which everyone is treated equally
and fairly in order to realize their full potential. In accordance with these
principles and in observance of the General Act on Equal Treatment (AGG)
in Germany, we fill our vacancies worldwide solely based on qualification
and without regard to ethnic heritage, gender, religion, sexual identity or
any disability.
Gerresheimer’s employees in the financial year 2018 come from a total of 58
nations and 64.4% of them work outside of Germany. Female employees
make up 32.5% of the workforce (prior year: 33.3%). Owing to the some-
times physically demanding nature of blue-collar work, there is unfortunately
only a relatively small number of female applicants for such positions. The
proportion of women in the first two levels of management was 22.5%
(prior year: 18.8%), thus marking an increase on the prior year (see under
“Stipulation of targets to promote the participation of women in management
positions in accordance with sections 76 (4), 96, and 111 (5) AktG”).
As a globally operating Company, we also rely on an international man-
agement team. As of November 30, 2018, 42% of the top two levels of
management were citizens of countries other than Germany. A total of
twelve nations are represented in our executive management.
Despite its decentralized organizational structure, Gerresheimer fosters a
sense of solidarity across national borders and throughout its divisions, plants
and departments. We held the fourth consecutive One Gerresheimer Week
in our plants worldwide during the year under review. The focus of One
Gerresheimer Week in June 2018 was on “teamwork”, one of our five core
values. All sites worldwide demonstrated the versatile and passionate ways
in which the value “teamwork” can be put into practice. They also organized
a large number of creative activities, ranging from quality workshops to
sports and recycling programs. Many of these were charitable activities,
such as blood drives, and once again numerous money donations were
collected for a good cause.
The seventeenth Gerresheimer soccer “world cup” also took place in June
2018. Eleven teams from various locations met in Tettau (Germany), for an
action-packed tournament. At the same time, another lineup of impassioned
teams faced off in women’s beach volleyball games.
73GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
OCCUPATIONAL HEALTH AND SAFETY MANAGEMENTWe attach great importance to the health and safety of our workforce. In
addition to our overall Group target of zero occupational accidents, there
are also plant-level and departmental occupational health and safety targets
that vary according to the business orientation of each unit. One example of
occupational health and safety in action is the “STOP program” at Centor
(Ohio/USA) and in Queretaro (Mexico). There, one performance indicator is
the number of employee safe behavior observations collected on observation
cards. At our Essen (Germany) location, target attainment in occupational
health and safety is measured by the number of five-minute safety brief-
ings. Recommendations for occupational health and safety measures are
incorporated in the Gerresheimer Management System.
We implement preventive measures to prevent potential accidents and health
hazards. In this regard, the human resources activities support our plants in
optimum, ongoing compliance with legally required standards as well as in
preventing occupational accidents. Regular training ensures that employees
at our locations have the necessary qualifications and up-to-date expertise
so that the number of accidents continues to fall. A total of 198 employees
around the world are members of formal occupational safety committees that
verify and ensure compliance with standards and safety regulations. Action
plans developed in safety audits also address the changing requirements
for workplaces resulting from digitalization. The global rate of occupational
accidents per million hours worked was 15.6 (prior year: 15.8), marking a
further decrease by 0.2. The number of occupational accidents was 228 (prior
year: 183). Out of those 228 occupational accidents, 63 related to female
employees and 165 to male employees. Most such accidents occurred in
Germany (95), followed by the rest of Europe (58), the Americas (40) and
emerging markets (35). Four occupational accidents required a significant
halt to production (prior year: one accident). In total, occupational accidents
resulted in 3,618 days’ absence (prior year: 4,844 days), representing a reduc-
tion of 1,226 days. With the measures we implement, we aim to continue
further reducing the number of accidents. We had zero fatal occupational
accidents in the financial year 2018 (prior year: zero). Due to the nature of
their employment, 206 employees have a high risk of job-related illnesses.
To maintain the health of our workforce throughout their working lives and
beyond, we offer a broad spectrum of measures at many plants to keep
employees physically and mentally fit. These include a “Take Your Bike to
Work” day and ergonomically designed workplaces.
EMPLOYEE RIGHTS AND WORKING CONDITIONSWe are fully committed to respecting, supporting and transparently reporting
on human rights within our remit. This commitment is enshrined in our
guideline on corporate responsibility. Our Gerresheimer Management System
ensures that the subject matter, importance and application of our corporate
responsibility guideline are communicated to employees at all plants. Plant
managers are required to establish a process to ensure compliance with
the principles set out in the guideline. We had no cases of human rights
violations anywhere in the world in the financial year 2018.
Under our own standards, local laws and international conventions such as
those of the International Labor Organization, child and forced labor are
likewise prohibited at Gerresheimer across the globe. Freedom of assembly is
ensured for our employees under collective bargaining and other agreements.
Workplace codetermination is institutionally established at Gerresheimer
by means of the Group Works Council, which looks after the interests of
our employees. The Group Works Council comprises 15 employees (prior
year: 14)—three women and twelve men (prior year: three women and
eleven men). As in the prior year, six employee representatives—two women
and four men—are members of the Supervisory Board of Gerresheimer AG.
Recruitment at Gerresheimer is done in accordance with the statutory
requirements and legal framework applicable in the country concerned.
Gerresheimer embraces a working environment in which all employees,
irrespective of nationality, origin, religion, gender, age, disability or sexual
orientation, are held in equally high regard and enjoy the same opportunities.
No cases of discrimination were reported in the financial year 2018.
With arrangements such as part-time programs, mobile working and flexible
work hours, we continue our efforts to support employees in balancing
work and family life by making it easier for them to care for children and
family members. A total of 298 employees in Europe (including Germany)
were employed part-time in the financial year 2018, corresponding to 5.5%
of the workforce.
Gerresheimer employees have the option of taking parental leave, including
in countries where there is no statutory provision for doing so. A total of
206 employees made use of this option in the financial year 2018. The
financial year 2018 saw 86.4% return to employment from parental leave.
A global employee survey was carried out for the third time during the
financial year 2018. Employees were asked in late September about a
range of topics, including working conditions, their area of employment,
development opportunities, teamwork and their working relationship with
direct superiors, workflows and workplace atmosphere. Overall employee
satisfaction showed a minor improvement over the last survey in 2015.
74 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
The survey findings were analyzed during the reporting year and presented
to the Management Board at the beginning of November. In a multilevel
process, all findings were presented at global management, business unit,
plant and department levels. Focus issues were specified at all levels and
workshops held to discuss and expand on them. Measures are being devel-
oped and implemented to address the deficits identified. The implementation
process commenced during the reporting year and will continue in the
financial year 2019.
With regard to remuneration, too, we attach great importance to providing
nationally and internationally competitive pay and to not having any pay
differential between women and men. We back this up by benchmarking
against external companies and with objective job grading in areas such as
executive management. Job grading is carried out uniformly throughout the
Group using the internationally recognized Kienbaum method. Additionally,
many of our employees are subject to binding pay scales under collective
agreements, which rule out gender-specific pay differentials for equivalent
work.
Our remuneration policy provides for a variable element in addition to fixed
pay. We had 1,078 bonus-eligible employees in the financial year 2018. For
our global executive management, we also have a midterm incentive relating
to the past three financial years. In the financial year 2018, 56 executive
management employees received midterm incentives (prior year: 52).
Gerresheimer provides employees at many locations with additional benefits
on top of financial remuneration components. These include subsidized
meals, subsidized public transport and group accident insurance.
OUR RESPONSIBILITY TOWARD SOCIETY
We strongly believe that we can deliver better results in the medium to long
term if we make not only economic but also social concerns the yardstick
of our actions. Accordingly, we have set ourselves the goal of engaging in
open dialog with diverse social groups beyond our corporate boundaries. We
have enshrined this responsibility to society in our corporate responsibility
guideline.
Our Gerresheimer Management System ensures that this guideline is com-
municated and complied with across all plants. As a local business and
employer in many different countries around the world, we also owe a
certain responsibility to the cities and regions in which we operate. Many of
our plants and employees therefore commit to local initiatives and support
local charities with campaigns and donations. The wide variety of activities
and fundraisers forming part of the One Gerresheimer Week we hold each
year are a prime example of our corporate social responsibility in action.
COMMUNITYAs an important global partner to the pharmaceutical industry, we aim to
contribute to society not only with our products, but also with our social
activities. Our efforts here have two main thrusts:
› Young people in education and training
› Improving health and well-being.
Focus on education and training
Our plant in Kundli (India) is patron to numerous schools in the region,
investing in new buildings, dining halls, bathrooms and the like. Similarly,
our plants in Horsovsky Tyn (Czech Republic), Boleslawiec (Poland) and Tettau
(Germany) support local schools in many and varied ways.
A large number of German plants also take part in the Girls’ Day initiative,
an annual event in Germany geared to enabling young women to find out
more about technical professions. A further case in point is the creation
of co-op education programs at our Czech plant in Horsovsky Tyn. Our
Medical Systems Business Unit supports the University of Applied Sciences
in Amberg-Weiden in many ways and collaborates with the university on
a co-op education program in medical engineering. In Tettau, Germany,
our plant is part of a regional innovation network that collaborates with
Coburg University of Applied Sciences, among others. For example, the
innovation network supported the development and provision of the new
ZukunftsDesign master’s program at the university.
Focus on improving health and well-being
Our plants likewise engage in diverse activities in this focus area. In Kundli
(India), for instance, our plant supports a local dialysis center. Our plant in
Kosamba (India) enhanced the link between the neighboring residential
district and local infrastructure in 2018 by repairing an old road. By building
a water filtration plant, we have been able to provide numerous residents of
this neighborhood—including many children—with access to clean drinking
water. In Shuangfeng (China), our plant provided support in 2018 for a local
charity, Danyang, which aims to improve healthcare as well as assist the
training of disabled and disadvantaged people in the region.
Since 2012, our plant in Tettau (Germany) has served as a founding member
of a regional intergenerational project in order to specifically foster social skills
among our trainees. In 2018, this project received the German Demography
Excellence Award, which was presented for the tenth time to commercial
flagship projects that address and develop innovative solutions surrounding
the issue of demographic change.
Gerresheimer Regensburg has a special commitment to helping children
with chronic illnesses and disabilities, and donates to related local facilities.
The plant in Vaerloese (Denmark) organizes workforce activities and donates
to a Danish cancer initiative; similar activities are carried out by our plant
in Zaragoza (Spain). Gerresheimer subsidiary Sensile Medical, which was
acquired in July 2018, supports a local initiative on cardiovascular disease
in Olten (Switzerland).
In Duesseldorf, the location of our Head Office, we funded an exhibition
on the history of the glassworks in the district of Gerresheim, where
Gerresheimer was first established with the construction of the first glass-
works in 1864.
As part of One Gerresheimer Week, numerous other Gerresheimer locations
collected donations in cash and in kind for charities and projects in their
regions.
75GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
POLITICAL INFLUENCEThe Gerresheimer Group does not exercise political influence beyond the
scope of customary industry association activities. Gerresheimer has no
offices for political communication in Berlin, Brussels or other cities. Nor
does Gerresheimer make donations or contributions to governments, political
parties or politicians in any part of the world. The requirements for charitable
donations and the award of consultancy contracts are clearly regulated.
Substantial donations require corresponding approval and are subject to
the Group’s strict compliance regulations.
Since our glass production plants consume a lot of energy, legislation and tax
regulation relating to the purchase and consumption of energy and treatment
of emissions is of particular interest to us. However, as an enterprise we
have no influence over the corresponding legislative process and instead
work to establish a joint position on such issues through our involvement
in relevant industry associations.
Our main industry association memberships comprise membership of
the Federal Association of the German Glass Industry (BV Glas) (for glass
locations in Germany) and the European Container Glass Federation (FEVE).
Gerresheimer is also a member of relevant employer associations.
OUR RESPONSIBILITY FOR ETHICAL BUSINESS CONDUCT AND CONFORMITY WITH THE LAW
It is vital for the success of the Gerresheimer Group that all of the Group’s
companies are managed in accordance with ethical business principles,
responsibly and in compliance with the laws and rules of fair competition.
The Gerresheimer Compliance Management System (CMS) was introduced
in 2009 and has been subject to ongoing development ever since. From the
outset, the main focus of compliance has been on combating corruption and
adhering to the provisions of antitrust and capital market law. Violations in
these areas can result in major loss or damage that must be avoided under all
circumstances. It goes without saying that Gerresheimer promotes conduct
aligned with the rules of compliance in all other areas as well.
The core elements of the CMS include the Gerresheimer Compliance Program,
on-site training, web-based e-learning programs, and a whistle blower system
that allows reports to be made anonymously if desired.
The purpose of the CMS is to assure legally compliant conduct by all
Gerresheimer Group employees worldwide. This serves to prevent criminal
offenses such as fraud, embezzlement and corruption as well as to ensure
compliance with corporate guidelines and directives. The CMS thus safe-
guards the value of the Company on a lasting basis and reduces liability
risk and the risk of fines.
No judicial or official proceedings in connection with focal issues under
the CMS were initiated or conducted against Gerresheimer in the financial
year 2018.
COMPLIANCE ORGANIZATIONPerformance of the management function in the area of compliance is
the duty of the entire Management Board of Gerresheimer AG. The Chief
Executive Officer holds special responsibility for compliance within the
Management Board.
Responsibilities of the Chief Executive Officer notably include preparing
Management Board resolutions in relation to compliance issues, deciding
measures to investigate and sanction compliance violations, reporting to
the Management Board and to the Supervisory Board Audit Committee on
compliance cases and action taken, revision of the Compliance Guidelines
and functional supervision of the Compliance Officer.
The role of the Compliance Officer as appointed by the Management Board
is held by the General Counsel. Organizational responsibility is held by the
Compliance Officer for implementing and updating the guidelines issued by
the Management Board and for providing training; the Compliance Officer
also serves as the point of contact for questions and suggestions on the
Gerresheimer Compliance Program and for reporting on any violations of
compliance rules. In the event of infringements, the Compliance Officer
carries out investigations and disciplinary action on the instruction of the
CEO. Possible legal consequences of compliance violations comprise sanctions
under labor law, enforcing damages claims, and pressing criminal charges.
Each Gerresheimer Group Company has a designated individual who is
responsible for compliance in that company. These individuals each have
responsibility for monitoring compliance and, in consultation with the
Compliance Officer, for providing compliance training in their company.
COMPLIANCE PROGRAMGerresheimer’s Compliance Program is intended to support our employees in
correctly applying laws and company guidelines and to protect them against
infringements. All three focal areas selected for the Gerresheimer Compliance
Program (combating corruption, antitrust law and capital market law) are
covered by binding guidelines supplemented by instructions. Infringements
are not tolerated in any of these areas.
76 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
Specifically, the Gerresheimer Compliance Program comprises the following
elements:
› Mission Statement
› Group Guideline on the Compliance Organization
› Group Guideline on Combating Corruption
› Group Guideline on the Employment of Consultants and Agents
› Group Guideline on Compliance with Antitrust Regulations
› Group Guideline on Insider Law
› Instructions on the Group Guideline on Combating Corruption
› Instructions on Compliance with Antitrust Regulations
› Instructions on Conduct in the Case of Official Searches
› Instructions on Managers’ Transactions (Insider Guideline)
› Instructions on Consequences of Compliance Infringements
All compliance guidelines are publicly available on the website,
www.gerresheimer.com.
ON-SITE TRAININGAll Gerresheimer Group companies run on-site training courses to introduce
the Gerresheimer Compliance Program. Attendance is mandatory for all
managing directors, senior staff, sales and purchasing employees, and—in
consultation with the local managing directors—any other employees who
could potentially become involved in corruption or antitrust matters. This
ensures that employees are able to take notice of the guidelines issued by
the Management Board and apply them in their day-to-day work.
In Germany, the on-site training is led by the Compliance Officer or one of
his or her colleagues; in other countries, it is led by local attorneys.
E-LEARNING PROGRAMSThe electronic training programs are intended to supplement the on-site
sessions in order to refresh employees’ memories about the content of
the Gerresheimer Compliance Program at irregular intervals. Our staff are
required to complete these training programs and can do so at work as part
of their working day. There are currently training programs on the focal areas
of combating corruption and antitrust law.
These programs are available in several languages for the same employees
who attend the on-site sessions. Approximately 930 employees worldwide are
currently required to take part in the on-site training courses and e-learning
programs.
WHISTLEBLOWER SYSTEMAnother key element of the CMS is the electronic whistleblower system.
This is geared toward exposing white-collar crime and thus protecting
Gerresheimer against damage and loss.
The whistleblower system provides a direct, online channel to the Compli-
ance Officer that is available around the clock and anywhere in the world.
Whistleblowers can choose to give their name or remain anonymous. This
reporting procedure is open to employees, customers and suppliers as well
as other third parties. The whistleblower system can be used in all the
languages relevant to the Gerresheimer Group in order to make it as easy
as possible to access.
QUALITY MANAGEMENT
We aspire to high standards of quality across all products and processes. In
attaining our self-imposed quality requirements and targets, an important
part is played by our Gerresheimer Management System, which is mandatory
for all of our plants worldwide. A key element of the quality management
systems required under the GMS is ISO certification for our plants and
compliance with further quality standards.
In a Group-wide quality initiative launched in 2011, we developed binding
quality requirements and key performance indicators (KPIs) and implemented
them at all divisions and plants the world over. Using these indicators, we
continuously monitor processes to secure production, process and customer
service quality levels. This considerably shortens our reaction time to any
variance from self-imposed targets. Monitoring and measurement of internal
metrics is supplemented with direct feedback from customers. In addition
to our own quality targets, we also develop other, customer-specific quality
agreements.
Gerresheimer continued the “Quality in Everything” global quality campaign
for all employees through 2018. Launched in 2017, the campaign aims to
increase each employee’s awareness of their personal responsibility for quality
in its many facets. The quality campaign has been rolled out in all plants via
a range of communications measures, including newsletters, posters, flyers,
videos and an activity day. The successful campaign will also be continued
in the financial year 2019.
As part of our product responsibility, we support our customers in regulatory
processes such as compliance with GMP and FDA guidelines as well as
preparing and submitting documentation for medical products and pharma-
ceutical primary packaging (such as Type III Drug Master Files (DMFs) and EU
files). Most of our primary packaging solutions meet the requirements of
the European Pharmacopoeia (Ph. Eur.) and United States Pharmacopoeia
(USP) and, to some extent, also the Japanese Pharmacopoeia (JP). For this
purpose, we provide a high level of documentation for our products. As a
result, we have FDA registrations, Drug Master Files, product registrations
and product approvals in numerous countries to provide our customers with
full information about our products.
A key element of our continuous quality improvement is the increased use of
cleanroom technology, which we are constantly extending and enhancing.
In many of our plants, products are made, processed and wrapped in
cleanrooms. Automated product inspection is also crucial. Most plants make
widespread use of automated inspection systems to measure and control
each and every product. Advanced, fully automated high-resolution camera
and sorting systems play an important part. These include our proprietary
77GROUP MANAGEMENT REP ORT› Non- Financial Group Declaration pursuant to Section 315b HGB
quality systems, such as Gx® G3, Gx® FLASH, Gx® RHOC, Gx® THOR and
Gx Tekion®. Further information on innovation and quality improvements
in products and processes is provided under “Innovation, Research and
Development”.
The Gerresheimer quality key performance indicators (KPIs) constitute an
essential component of our quality systems. These KPIs enable us to measure
our compliance with quality targets. A total of eight quality KPIs have been
specified that all plants are required to monitor.
One KPI, for example, is Right First Time (RFT), which measures the percent-
age of zero-defect products coming off the production line. That allows us
to see how efficient our production process is, including in-process controls.
Internal Rejects (IR) shows what proportion of our products fail in-house
quality control. This shows us the stability and reliability of our production
process. Using another KPI, On Time In Full (OTIF), we measure order fulfill-
ment quality in product shipments to customers. It is our metric for delivery
reliability. FA is short for First Acceptance and indicates the percentage of
product batches that customers accept on arrival; ideally, of course, this
will be 100%. The opposite is true of the Customer Complaint Rate (CCR),
which we naturally seek to minimize.
Complaint Response in Time (CRIT) tracks the proportion of complaint
tickets processed and closed within 21 calendar days. A somewhat more
complex KPI is Cost of Non-Quality (CNQ). By cost of non-quality we mean
the total direct and indirect cost we incur due to defects. It thus quantifies
the current quality level in financial terms. Finally, the Gerresheimer quality
KPIs are rounded out by CAPA Overdue. This indicates the percentage of
corrective action/preventive action (CAPA) tasks that are past due.
Initial and regularly renewed certification serves as objective proof that
our production operations and processes conform to specific criteria and
standards. All of our production locations have ISO 9001 quality management
systems certification. Twenty of our 38 plants are certified to ISO 15378 as
meeting the special requirements for the manufacture of pharmaceutical
primary packaging materials. Twelve of our 38 production locations possess
ISO 13485 certification, which stipulates the requirements for a compre-
hensive management system for the design and manufacture of medicinal
products. In addition, 13 of our 38 production locations have ISO 14001
certification for environmental management and twelve of our 46 loca-
tions have ISO 50001 certification for state-of-the-art energy management
systems. Our plant in Pfreimd (Germany) additionally has a manufacturing
license in accordance with the German Medicines Act for pharmaceutical
secondary packaging in large-scale production as well as for the production
of clinical samples. With regard to the transfer of the demanding GMP rules
from the pharmaceutical sector to cosmetics packaging, we meet ISO 22716
at our cosmetic glass plant in Tettau (Germany).
INNOVATION, RESEARCH AND DEVELOPMENTWe aim to become the leading global partner for enabling solutions that
improve health and well-being. At the same time, our customers’ require-
ments are changing: Innovation and quality play an increasingly important
role in the market. This makes issues such as rising quality expectations as
well as innovative products and solutions part our growth strategy. We aim to
continue investing both in enhancing production and product quality as well
as in fine-tuning our product portfolio. This entails close collaboration with
our customers and with our partners in industry, in the scientific community
and in other institutions.
We manufacture specialized products—primary pharma packaging—that
come into direct contact with pharmaceuticals and that patients use in
everyday life to take their medication. Our primary packaging and drug
delivery devices are consequently important products for the pharma industry.
Primary packaging and drug delivery devices are subject to extremely strict
requirements imposed by the national and international regulatory authori-
ties, particularly with regard to manufacturing processes and product quality.
Newly developed drugs also create more demanding requirements for primary
packaging products and their quality. Simple and safe drug application is
another increasingly important focus. Through continuous improvements in
products and processes coupled with our innovations, we have established
a strong position in the market and among our customers—a position that
we aim to further enhance.
ENGINEERING
From our longstanding experience with glass and plastics as materials
and with complex production processes, we have developed considerable
engineering expertise for the continuous improvement of production pro-
cesses and product quality. Each business unit has its own engineering and
development capabilities.
We have four Technical Competence Centers (TCC) in our Medical Systems
Business Unit. Experts at our TCC in Wackersdorf (Germany), Peachtree
City (Georgia/USA) and Dongguan City (China) focus on the design and
development of customer-specific plastic medical products. Development
of prefillable syringes and safety accessories takes place at our TCC in
Buende (Germany) and at the TCC Wackersdorf. Development and design
for new products are also performed by Gerresheimer item GmbH. In the
Advanced Technologies Division, our subsidiary Sensile Medical is working
on developing the next generation of medical products for the delivery of
liquid drugs. The aim is to develop easy-to-use, safe and precise liquid-drug
delivery products that enable people to continue treatment in their familiar
home surroundings.
78 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT › Non- Financial Group Declaration pursuant to Section 315b HGB› Innovation, Research and Development
An engineering team in the USA develops and improves production and
quality processes in the Tubular Glass Business Unit—the process of making
injection vials, ampoules, cartridges and syringes from glass tubing. The
team’s job is to continuously improve the machine and inspection systems
we use to quality-control products. Products we develop in-house are linked
into a meticulous inspection system that ensures maximum precision and
quality assurance to the latest standards. Our Gx® G3 inspection system for
prefillable syringes and injection vials enables all parts of a syringe barrel
to be inspected with high-resolution cameras. Gx® RHOC is a proprietary
Gerresheimer camera system offering high dimensional quality. Gx® THOR is a
technology developed by Gerresheimer to reduce delamination susceptibility
in vials. The technology is integrated into existing forming lines. Gx® FLASH
is a proprietary Gerresheimer test procedure to predict the susceptibility of
vials to delamination. Gx Tekion® is a system developed by Gerresheimer
for cleaning glass tubes with ionized air.
The Tubular Glass Business Unit is also host to our multi-year global machine
strategy project launched in 2014. In this, we aim to provide customers
with significantly improved injection vials of the highest quality, irrespective
of the plant and region where they are produced. We install two types of
machines to produce injection vials that exceed the industry standard both
cosmetically and dimensionally. The two machine types are supplemented
with standardized control, inspection and packaging technology. After
completing machine modernizations in the US and Mexico in 2016, the
focus in 2017 and 2018 was on Europe and Asia. In the financial year under
review, we were already able to start producing and shipping products made
with the new machine generation in China.
We invest continuously in state-of-the-art production and inspection tech-
nology in our Moulded Glass Business Unit. By regularly renewing furnaces,
we have substantially boosted capacity at our molded glass plants in the
last ten years while significantly cutting energy consumption per ton of
glass produced. Regularly increasing automation in raw material supply and
batch-making in combination with modern furnace control systems makes
for continuous efficiency gains at the ”hot end“. In the financial year 2018,
we invested, among other things, in additional production and finishing
lines for glass cosmetics packaging in the plants in Tettau (Germany) and
Momignies (Belgium). Moreover, packing robots are increasingly being used
for the end-of-line packaging of glass products, ensuring high accuracy and
the prevention of errors during final packing on pallets.
In the Primary Packaging Glass Division, we launched a new manufacturing
execution system (MES) in the financial year 2018 to help us streamline and
accelerate production while simultaneously improving production quality.
The new system centers on real-time interconnection and data exchange
across all stages of the production process. Introducing the MES in the
molded and tubular glass plants in the Primary Packaging Glass Division will
significantly improve communication flow between the various production
sections. Specially adapted to our needs, the system aids early fault detection
and troubleshooting. The MES was introduced at our molded glass plant in
Chicago Heights (Illinois/USA) in 2018. It will be rolled out across all plants in
the Primary Packaging Glass Division over the next few years. Several plants
in the Medical Systems Business Unit already have the second generation
of the MES in service. Defects, machine failures, line malfunctions and the
like are automatically captured or simply entered into the MES. Everyone
else involved is informed instantly. This ensures systematic fault detection
and boosts quality and productivity.
In the manufacture of molded glass for drugs and cosmetics, the key lies
in developing and producing molds to maximum precision. Gerresheimer
stands out for its great versatility and product diversity in both pharma jars
and cosmetic glass products. A perfect, even flow of molten glass inside
molds is important in giving strength to the delicate products. To achieve
this, we use advanced simulation software that we have fine-tuned to the
special requirements of our product range. The simulation software calibrates
production parameters on the basis of computational fluid dynamics. As
a result, the molding process and mold design are optimized, taking into
account all chemical and physical properties of the glass. In this way, the
software not only improves our products, but makes for a decisive reduction
in development time.
PRODUCT INNOVATIONS
By acquiring the Swiss tech company Sensile Medical in the summer of 2018,
Gerresheimer not only supplemented its product range with wearable micro
pumps but also paved the way for the Group’s new Advanced Technologies
Division. The new division pools Gerresheimer’s development and production
of smart drug delivery systems.
Sensile Medical’s innovations build on its proprietary micro pump technology,
which provides the basis for the full range of infusion devices. Subject to on-
going development and improvement, this pump technology is safeguarded
by patents through to the 2030s. Sensile’s liquid-drug delivery systems are
all based on this same technology platform and allow flexible, precise and
reliable administration of liquid drugs in various indication areas, including
self-treatment for diabetes and Parkinson’s. Alongside this core technology,
Sensile Medical has developed additional modules that can be slotted into
custom solutions as needed in a fully modular technology system. In this
way, Sensile Medical is able to develop solutions adapted to treatment and
patient needs.
79GROUP MANAGEMENT REP ORT› Innovation, Research and Development
Sensile Medical currently has several projects with global pharma companies
at various stages of development. Additional areas of innovation include
device connectivity and other digital solutions for the entire care chain.
In September 2018, a wearable micro pump from Sensile Medical for treat-
ment at the advanced stage of Parkinson’s disease gained CE certification
for the European market.
Many new drugs—above all biotech and oncology drugs—set the bar even
higher for primary pharma packaging. We are developing an extensive
portfolio of new and improved products for this fast-growing market. The
Gx RTF® ClearJect® syringe is a perfect complement to the broad portfolio of
prefillable Gx RTF® glass syringes. It combines the existing syringe portfolio
made from cyclic olefin polymer (COP)—a high-performance plastic—with
the ready-to-fill concept featured on Gerresheimer’s prefillable glass syringes.
The first product in the new line, a 1 ml syringe with integrated cannula,
is being manufactured by Gerresheimer in Europe. COP offers numerous
advantages as a material. In particular, there is no need during processing
for additives such as tungsten or adhesive for the cannula. This makes the
Gx RTF® ClearJect® syringe especially well-suited to drugs with exacting
requirements.
The prefillable glass syringes marketed by Gerresheimer as Gx RTF® syringes
also undergo continuous enhancement to make them the primary packaging
of choice for new drugs. One problem associated with syringe use is that
traces of tungsten or other metals occasionally leave residue behind in the
bore when the syringe cone is shaped. Especially for drugs based on biotech
products, prefillable syringes are needed that ideally preclude the possibility
of metal contamination.
With their exposed needles, used syringes are an ever-present hazard at
doctors’ practices, laboratories and hospitals. Existing needle safety sys-
tems reduce the risk of injury for the end user. However, they require more
assembly after filling is carried out by the pharma company and potentially
additional activation steps when the syringe is used by medical specialists.
With Gx InnoSafe®, we are going to provide a syringe with an integrated
passive safety system that avoids inadvertent needleprick injuries, precludes
reuse and is optimized both for pharma industry production workflows and
for simple, intuitive use by medical personnel. As part of the manufacturing
process, the Gx InnoSafe® safety system is installed like a standard needle
shield on Gx RTF® glass syringes in the cleanroom. The syringe barrel is
completely visible so that the presence of the active ingredient, its purity
and its administration can easily be verified by sight. These syringes are
packed in the same way as standard RTF syringes. The injection itself is also
administered as usual. The system is activated only when the cannula is
inserted. It automatically ensures that the safety mechanism is permanently
locked when the syringe is removed from the injection site. This guarantees
that the cannula is reliably covered and the syringe cannot be reused.
The Gx® Elite vials developed by Gerresheimer represent a new quality stan-
dard for type 1 borosilicate glass vials. They are the result of comprehensive
optimization measures in the converting process that have focused on de-
signing out risks of product flaws being caused during production, including
the removal of all glass-to-glass contact beginning with the tubing material
all the way through to final packaging of the vials. The chemical composition
of the borosilicate glass is still the same. The highly shatter-resistant injection
vials are extremely durable and free of cosmetic defects. They also boast
high dimensional accuracy.
The new Gx® RTF vials combine the two Gerresheimer core competencies—
molding vials from glass tubing and the ready-to-fill process for prefillable
syringes—with a corresponding packaging technology. Gx® RTF vials are
washed, packed in trays or nests and tubs, sterilized and shipped to pharma
customers, who can then start filling straightaway without any additional
process steps. The product is available in several formats for nest and tub
packaging. With this packaging technology, the vials can be used at any time
from the development phase of new medications to small-batch production
or even industrial-scale production.
We likewise provide easy-to-fill vials for use by pharma customers in the
US market. Gx® ETF vials are molded from type 1 borosilicate glass tubing,
washed and sterilized, packed in compatible tubs and sealed. As an option,
they can additionally be sterilized with ethylene oxide. Customers then only
have to open the tubs and place them on the filling line.
Under the BioPack name, we have launched an extensive portfolio of plastic
packaging for drugs and cosmetics made from biomaterial in place of conven-
tional polyethylene (PE) or polyethylene terephthalate (PET). Innovation and
environmental protection go hand in hand. As a case in point, Gerresheimer
has developed a plastic container for a major cosmetics customer that can
be produced with less plastic due to a novel shape and easily stacked thanks
to an indentation in the base. This saves space and CO2e emissions during
shipment. The container is also refillable. Both of these product innovations
are described in more detail under “Environmentally friendly products and
use of natural resources”.
80 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Innovation, Research and Development
REMUNERATION REPORT
The Remuneration Report complies with the requirements of the German
Commercial Code (Handelsgesetzbuch/HGB), the recommendations of
the German Corporate Governance Code (DCGK), German Accounting
Standard 17 (GAS 17) and International Financial Reporting Standards (IFRS).
The new Management Board remuneration system approved at the Annual
General Meeting on April 30, 2015 applies as a matter of policy to all
members of the Gerresheimer AG Management Board.
MANAGEMENT BOARD REMUNERATION
STRUCTURE OF REMUNERATIONThe total remuneration of active members of the Management Board consists
of several components. These are a fixed salary and the customary fringe
benefits, short-term variable cash remuneration, long-term variable cash
remuneration, long-term share-price-based variable cash remuneration and
pension benefits.
NON-PERFORMANCE-BASED REMUNERATIONThe non-performance-based components are a fixed salary and non-cash
fringe benefits. The latter mainly comprise insurance premiums (including
group accident insurance and invalidity insurance) as well as the use of a
company car. There is also directors and officers liability (D&O) insurance
for members of the Management Board; this provides for a deductible in
accordance with section 93 (2) sentence 3 of the German Stock Corporation
Act (Aktiengesetz/AktG).
PERFORMANCE-BASED REMUNERATIONShort-term variable cash remuneration
The short-term variable cash remuneration is tied to attainment of annual
targets agreed in each member’s contract of employment. The target figures
are derived from a budget approved by the Supervisory Board. They relate
to variously weighted financial KPIs, namely adjusted EBITDA, net working
capital and revenues. The net working capital target component is calculated
as average net working capital as a percentage of revenues. If all targets
are met, the short-term variable cash remuneration is 50% of the individual
fixed salary. Limited to a maximum of 70% of the individual fixed salary,
the short-term variable cash remuneration is paid out in the subsequent
year following approval of the Consolidated Financial Statements by the
Supervisory Board.
CUSTOMER-SPECIFIC DEVELOPMENT
For customer-specific plastic medical products, development, machine
construction, mold making and industrialization are co-located in our
Competence Centers in the Plastics & Devices Division. These are sited
at Wackersdorf (Germany), Peachtree City (Georgia/USA) and Dongguan
City (China). We also offer integrated small-batch production to support
customers in the multi-stage approval process for pharmaceutical and medical
technology products. The development and approval process requires us to
repeatedly produce small numbers of units as clinical samples or stability
batches. To this end, we have set up a separate small-batch production line
at our development center in Wackersdorf so that we can flexibly react to
customer inquiries and integrate this into our development process. We
started with small-batch production for medical plastic products and have
now added a small-batch production line for prefillable glass syringes.
Customer-specific development also plays a major part in glass cosmetics
packaging such as perfume flacons and cream jars. Like ourselves, our
customers require high standards in both process and product quality. Most
of our glass cosmetics packaging is produced in our molded glass plants in
Tettau (Germany) and Momignies (Belgium). Each year, we develop a large
number of new glass packaging products for the cosmetics industry. In
addition, we produce several hundred variants of these different types of glass
cosmetic packaging, in some cases applying elaborate finishing technologies
such as spray coating and metallization. Expansion in finishing technologies
in these plants in particular has been and remains a notable focus of capital
investment for the growing high-quality cosmetics packaging market.
81GROUP MANAGEMENT REP ORT› Innovation, Research and Development› Remuneration Report
Long-term variable cash remuneration
The component with a long-term incentive effect consists of a rolling bonus
system tied to attainment of specific targets over a three-year period. The
key performance indicators relevant to target attainment are organic revenue
growth and return on capital employed (Gx ROCE).
For long-term variable cash remuneration, the relevant key performance
indicators are set each year for the next three years based on the business
plan. The bonus payable on target attainment due to the sustainability com-
ponent is 40% of the individual fixed salary. The sustainability component
is capped at 55% of the individual fixed salary. Bonuses are paid out three
years after the base year.
Target attainment was previously measured against the arithmetic mean of
the annual figures in the three-year period. The bonus payable on target
attainment is 30% of the individual fixed salary. It is capped (on 133% target
attainment) at just under 40% of the individual fixed salary. Bonuses are paid
out three years after the base year. This previous arrangement applies for
the last time to Mr. Schütte in respect of long-term variable remuneration
for the financial year 2016 and pro rata for the financial year 2017 and to
Mr. Beaujean pro rata for the financial year 2016.
Long-term share-price-based variable cash remuneration
(phantom stocks)
The Company has additionally agreed long-term share-price-based variable
cash remuneration with all members of the Management Board. Under
these agreements, members receive a value-based allocation, according to
the share price, for each year of Management Board service. Management
Board members are awarded an entitlement (in a specific amount) to a
payment in the event that the exercise and payment conditions are met.
After a five-year vesting period, a Management Board member is entitled,
within an ensuing period of 24 months, to demand payment in the amount
of the appreciation in the stock market price of Gerresheimer shares between
the issue date and the exercise (maturity) date. Payment is conditional on
the percentage appreciation being at least 20% or being greater than the
percentage increase in the MDAX over the maturity period and on the
Management Board member, as of the exercise date, still being in active
service in the company and a member of the Management Board on the basis
of their Management Board contract. The target-based remuneration is to
be 40% of the individual fixed salary for each member of the Management
Board on attainment of an exercise target comprising a 20% increase in the
share price. If the share price rises during the set period by 40% or more,
the entitlement awarded to the members of the Management Board is
capped at 80% of their individual fixed salary. All entitlements to the issue
of further phantom stock expire without substitution or compensation on
departure of the respective member of the Management Board. This also
applies to the year of early contract termination itself if the contract is
terminated before the issue date in that year. Any exercisable phantom stock
entitlements that are within the defined exercise period, and all entitlements
arising from phantom stock already issued but yet to mature that are within
the defined waiting period remain unaffected and can be exercised by the
holder in accordance with the general stipulations of the phantom stock
agreement. However, any phantom stock entitlements for tranches already
issued are reduced pro rata temporis in the year of departure. The issue
price for tranche 12 in the financial year 2018 is EUR 67.42 and only takes
into account commitments under the new system.
Under the previous arrangements, members were granted a specific number
of stock appreciation rights (phantom stocks), according to the share price,
for each year of service on the Management Board. Each stock appreciation
right entitled the holder to a payment based on the change in the share
price, subject to a performance threshold: At the exercise date, this dictated
that the Company’s share price must exceed the initial price for the relevant
tranche by at least 12% or must have increased by a larger percentage than
the MDAX. It was possible to exercise stock appreciation rights during a
16-month exercise period following a four-year waiting period. The payment
amount was equal to the absolute increase in the share price between the
issue date of the stock appreciation rights and the exercise date. However, the
payment amount for each tranche was capped at 25% of the initial price of
all stock appreciation rights in the same tranche. At the time of termination
of the Management Board contract, all exercisable stock appreciation rights,
all entitlements resulting from stock appreciation rights already granted but
yet to mature and all entitlements to the issue of further stock appreciation
rights expired without substitution or compensation. If the day on which
the holder’s employment contract ended was after the first anniversary of
the issue date of stock appreciation rights in a tranche already issued, but
before the exercise date for that tranche, the stock appreciation rights in that
tranche remained unaffected. The foregoing now only applies to tranche 9
for Mr. Beaujean and tranches 9 and 10 for Mr. Schütte.
Pension benefits
After leaving the Gerresheimer Group, the current members of the Manage-
ment Board are normally eligible to receive pension benefits from age 65.
The annual pension entitlement is between 2.00% and 2.22% of the final
fixed salary, depending on age on joining the pension plan. This percentage
increases with years of service as a member of the Management Board
to a maximum of 40%. Surviving dependants’ pensions are provided for
at 60% of the deceased’s pension for the spouse and 20% per child for
any surviving children. Surviving dependants’ pensions are limited in total
to 100% of the deceased’s pension. These defined-benefit arrangements
relate to two active members of the Management Board—Mr. Beaujean
and Mr. Schütte—and in the case of Mr. Schütte are handled through a
provident fund.
82 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Remuneration Report
On February 10, 2015, the Supervisory Board of Gerresheimer AG also
modified the pension system as an integral part of the new remuneration
system for newly appointed Management Board members. The previous
defined-benefit company pension arrangement for Management Board
members has been discontinued and is modified as follows.
Under the new arrangements, the amount to be furnished by the Company
for new Management Board members’ pensions is to be determined as
20% of the fixed salary plus 20% of the short-term variable cash remuner-
ation attained. New Management Board members may choose from three
options as to how this amount is used: (1) 20% of the fixed salary paid into
an insurance policy and 20% of the short-term variable cash remuneration
paid into an investment; (2) 20% of the fixed salary paid into an insurance
policy and 20% of the short-term variable cash remuneration paid out
for personal pension provision; (3) 20% of the fixed salary and 20% of
the short-term variable cash remuneration paid out for personal pension
provision. This new form of pension plan relates to two active members
of the Management Board—Mr. Siemssen and Dr. Burkhardt—both of
whom have elected the above option (3).
In the case of the insurance policy in the above options (1) and (2) under
the new pension arrangements, a Management Board member earns
entitlement on retirement to payment of an annuity-based old-age, invalidity
and surviving dependants’ pension. Alternatively, a Management Board
member can elect to have the accumulated capital paid out on retirement.
The pension entitlement then lapses.
In the capital-based option, the Company has a top-up obligation up
to the amount paid in on retirement (claim event) if the value of the
investment falls, as the Company must guarantee capital maintenance
to ensure qualification as a company pension arrangement. Any notional
underfunding prior to the claim event must therefore be accounted for—if
only temporarily, as appropriate.
If a Management Board member has the scheduled annual contribution
amount paid out while still in service, as an additional salary component
for personal pension provision, the Company has no further obligation
once payment has been made.
Termination benefits
Termination benefits in the event of premature termination of a Management
Board member’s contract other than for cause are capped as recommended
in the German Corporate Governance Code. Severance payments, including
fringe benefits, in the event of premature termination of a Management
Board member’s contract other than for cause are therefore capped to a
maximum of two years’ remuneration and do not compensate more than
the remaining term of the contract. The cap on termination benefits is
determined with reference to total remuneration.
In the event of a change of control, Management Board members have a
once-only special right to terminate their contracts at six months’ notice
effective as of the end of the month and to resign as of the end of the notice
period. The special right of termination applies solely within three months
of the point in time at which the Management Board member gained—or
were it not for gross negligence would have gained—knowledge of the
change of control. The special right of termination only applies if, at the
date notice is given, the contract has a remaining term of nine months or
more. If a Management Board member exercises his or her special right of
termination, the Company is required to pay termination benefit equal to
three times the annual remuneration less amounts paid during the notice
period. Annual remuneration is defined as remuneration for the full financial
year, including short-term and long-term variable cash remuneration, but
excluding long-term share-price-based variable cash remuneration.
In connection with the withdrawal of Mr. Schütte from the Management
Board of Gerresheimer AG as of February 28, 2019, a one-year post-
contractual non-compete covenant was agreed with effect from March 1,
2019. For the duration of the post-contractual non-compete covenant,
Mr. Schütte will receive a compensation payment in the total amount of
EUR 495,000.00, payable in twelve equal monthly installments. No post-
contractual non-compete covenant has been agreed with any other active
member of the Management Board.
MANAGEMENT BOARD REMUNERATION IN THE FINANCIAL YEARThe recommendations of the German Corporate Governance Code on
determining Management Board remuneration have been implemented.
Total remuneration of active Management Board members during the
financial year 2018 came to EUR 11,119k (prior year: EUR 8,872k). This
comprised EUR 6,209k in non-performance-based remuneration (prior year:
EUR 2,219k) and EUR 2,302k in performance-based remuneration (prior
year: EUR 3,672k). Pension expenses amounted to EUR 924k in the financial
year 2018 (prior year: EUR 1,200k). Vested stock appreciation rights in the
financial year under review came to EUR 1,684k (prior year: EUR 1,781k).
83GROUP MANAGEMENT REP ORT› Remuneration Report
Remuneration of individual Management Board members in the financial
year 2018 is presented in the tables below:
Dietmar SiemssenCEO
from November 1, 2018
Dr. Christian FischerCEO
to February 5, 2018
Rainer BeaujeanSpeaker of the Management Board from
February 5, 2018 to October 31, 2018 and CFOAndreas SchüttePlastics & Devices
Dr. Lukas BurkhardtPrimary Packaging Glass
from January 1, 2018
Benefits granted in EUR k 2018
2018Min.
2018Max. 2017 2018
2018Min.
2018Max. 2017 2018
2018Min.
2018Max. 2017 2018
2018Min.
2018Max. 2017 2018
2018Min.
2018Max. 2017
Fixed remuneration 79 79 79 – 4,2572) 4,2572) 4,2572) 317 650 650 650 630 648 648 648 630 523 523 523 –
Non-cash remuneration 3 3 3 – 3 3 3 6 20 20 20 20 21 21 21 21 5 5 5 –
Total 82 82 82 – 4,260 4,260 4,260 323 670 670 670 650 669 669 669 651 528 528 528 –
Short-term variable cash remuneration 40 401) 55 – – – – 158 325 – 455 315 324 – 453 315 261 – 366 –
Long-term variable cash remuneration 32 32 2,324 – – – – 127 260 – 358 252 259 – 356 226 209 – 1,655 –
Plan 2017 – 2020 – – – – – – – 127 – – – 252 – – – 226 – – – –
Plan 2018 – 2021 32 321) 44 – – – – – 260 – 358 – 259 – 356 – 209 – 287 –
Phantom Stocks – – 2,280 – – – – – – – – – – – – – – – 1,368 –
Total 154 154 2,461 – 4,260 4,260 4,260 608 1,255 670 1,483 1,217 1,252 669 1,478 1,192 998 528 2,549 –
Pension expenses 24 24 24 – – – – 95 373 373 373 388 370 370 370 367 157 157 157 –
Total remuneration 178 178 2,485 – 4,260 4,260 4,260 703 1,628 1,043 1,856 1,605 1,622 1,039 1,848 1,559 1,155 685 2,706 –
1) Because Mr. Siemssen took up his duties as of November 1, 2018, he is guaranteed pro rata temporis short-term variable cash remuneration and long-term variable cash remuneration for the financial year 2018 based on assumed target achievement of 100%.
2) In connection with his unexpected departure from the Management Board of Gerresheimer AG for personal reasons, Dr. Fischer received an amount of EUR 4,020k.
In the financial year 2018, Mr. Siemssen and Dr. Burkhardt received new
phantom stock entitlements (tranches 13 to 15 and tranches 12 to 14, respec-
tively) in connection with their appointment to the Management Board. The
tranches are described in detail in the section “Long-term share-price-based
variable cash remuneration (phantom stocks)”. Given that it is a value-based
commitment, there is no fair value at the grant date.
Dietmar SiemssenCEO
from November 1, 2018
Dr. Christian FischerCEO
to February 5, 2018
Rainer BeaujeanSpeaker of the
Management Board from February 5, 2018to October 31, 2018
and CFOAndreas SchüttePlastics & Devices
Dr. Lukas BurkhardtPrimary Packaging Glass
from January 1, 2018
Benefits granted in EUR k 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
Fixed remuneration 79 – 4,2571) 317 650 630 648 630 523 –
Non-cash remuneration 3 – 3 6 20 20 21 21 5 –
Total 82 – 4,260 323 670 650 669 651 528 –
Short-term variable cash remuneration – – 158 – 245 308 261 309 – –
Long-term variable cash remuneration – – 127 – 786 801 725 734 – –
Plan 2014 – 2017 – – – – – 178 – 168 – –
Plan 2015 – 2018 – – – – 114 – 114 – – –
Plan 2017 – 2020 – – 127 – – – – – – –
Phantom Stocks – – – – 672 623 611 566 – –
Total 82 – 4,545 323 1,701 1,759 1,655 1,694 528 –
Pension expenses 24 – – 95 373 388 370 367 157 –
Total remuneration 106 – 4,545 418 2,074 2,147 2,025 2,061 685 –
1) In connection with his unexpected departure from the Management Board of Gerresheimer AG for personal reasons, Dr. Fischer received an amount of EUR 4,020k.
84 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Remuneration Report
Remuneration of individual Management Board members in the financial
year 2018 is presented in the tables below:
Dietmar SiemssenCEO
from November 1, 2018
Dr. Christian FischerCEO
to February 5, 2018
Rainer BeaujeanSpeaker of the Management Board from
February 5, 2018 to October 31, 2018 and CFOAndreas SchüttePlastics & Devices
Dr. Lukas BurkhardtPrimary Packaging Glass
from January 1, 2018
Benefits granted in EUR k 2018
2018Min.
2018Max. 2017 2018
2018Min.
2018Max. 2017 2018
2018Min.
2018Max. 2017 2018
2018Min.
2018Max. 2017 2018
2018Min.
2018Max. 2017
Fixed remuneration 79 79 79 – 4,2572) 4,2572) 4,2572) 317 650 650 650 630 648 648 648 630 523 523 523 –
Non-cash remuneration 3 3 3 – 3 3 3 6 20 20 20 20 21 21 21 21 5 5 5 –
Total 82 82 82 – 4,260 4,260 4,260 323 670 670 670 650 669 669 669 651 528 528 528 –
Short-term variable cash remuneration 40 401) 55 – – – – 158 325 – 455 315 324 – 453 315 261 – 366 –
Long-term variable cash remuneration 32 32 2,324 – – – – 127 260 – 358 252 259 – 356 226 209 – 1,655 –
Plan 2017 – 2020 – – – – – – – 127 – – – 252 – – – 226 – – – –
Plan 2018 – 2021 32 321) 44 – – – – – 260 – 358 – 259 – 356 – 209 – 287 –
Phantom Stocks – – 2,280 – – – – – – – – – – – – – – – 1,368 –
Total 154 154 2,461 – 4,260 4,260 4,260 608 1,255 670 1,483 1,217 1,252 669 1,478 1,192 998 528 2,549 –
Pension expenses 24 24 24 – – – – 95 373 373 373 388 370 370 370 367 157 157 157 –
Total remuneration 178 178 2,485 – 4,260 4,260 4,260 703 1,628 1,043 1,856 1,605 1,622 1,039 1,848 1,559 1,155 685 2,706 –
1) Because Mr. Siemssen took up his duties as of November 1, 2018, he is guaranteed pro rata temporis short-term variable cash remuneration and long-term variable cash remuneration for the financial year 2018 based on assumed target achievement of 100%.
2) In connection with his unexpected departure from the Management Board of Gerresheimer AG for personal reasons, Dr. Fischer received an amount of EUR 4,020k.
In the financial year 2018, Mr. Siemssen and Dr. Burkhardt received new
phantom stock entitlements (tranches 13 to 15 and tranches 12 to 14, respec-
tively) in connection with their appointment to the Management Board. The
tranches are described in detail in the section “Long-term share-price-based
variable cash remuneration (phantom stocks)”. Given that it is a value-based
commitment, there is no fair value at the grant date.
Dietmar SiemssenCEO
from November 1, 2018
Dr. Christian FischerCEO
to February 5, 2018
Rainer BeaujeanSpeaker of the
Management Board from February 5, 2018to October 31, 2018
and CFOAndreas SchüttePlastics & Devices
Dr. Lukas BurkhardtPrimary Packaging Glass
from January 1, 2018
Benefits granted in EUR k 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
Fixed remuneration 79 – 4,2571) 317 650 630 648 630 523 –
Non-cash remuneration 3 – 3 6 20 20 21 21 5 –
Total 82 – 4,260 323 670 650 669 651 528 –
Short-term variable cash remuneration – – 158 – 245 308 261 309 – –
Long-term variable cash remuneration – – 127 – 786 801 725 734 – –
Plan 2014 – 2017 – – – – – 178 – 168 – –
Plan 2015 – 2018 – – – – 114 – 114 – – –
Plan 2017 – 2020 – – 127 – – – – – – –
Phantom Stocks – – – – 672 623 611 566 – –
Total 82 – 4,545 323 1,701 1,759 1,655 1,694 528 –
Pension expenses 24 – – 95 373 388 370 367 157 –
Total remuneration 106 – 4,545 418 2,074 2,147 2,025 2,061 685 –
1) In connection with his unexpected departure from the Management Board of Gerresheimer AG for personal reasons, Dr. Fischer received an amount of EUR 4,020k.
85GROUP MANAGEMENT REP ORT› Remuneration Report
Long-term share-price-based variable cash remuneration
The table on Management Board remuneration includes share-based pay-
ment at fair value at the grant date.
In accordance with IFRS, total remuneration includes the fair value of the
benefit vested in the financial year. Within the vesting period, this means
that the fair value is recognized as expense from the grant date over the
corresponding period or until the member of the Management Board leaves
the Company. Details of outstanding phantom stocks are provided below
in accordance with IFRS 2:
Phantom stocks share-based IFRS:
Rainer Beaujean
Andreas Schütte
Portion of total expenses in EUR k
2018 233 273
2017 433 369
Fair value in EUR k
2018 497 712
2017 1,072 1,223
Number of phantom stocks
2018 55,000 100,000
2017 110,000 150,000
Phantom stocks value-based IFRS:
Dietmar Siemssen
from November 1,
2018
Dr. Christian Fischer
to February 5,
2018Rainer
BeaujeanAndreas Schütte
Dr. Lukas Burkhardt
from January 1,
2018
Portion of total expenses in EUR k
2018 19 – 550 471 138
2017 – 101 111 208 –
Fair value in EUR k
2018 1,598 – 1,038 690 958
2017 – 2,125 998 1,716 –
Pension benefits
The pension expenses attributable to each member of the Management Board
are shown in the Management Board remuneration table. The present value
of the defined benefit obligation must additionally be stated in accordance
with IFRS. This is shown in the table below:
in EUR k
Rainer Beaujean
Andreas Schütte
Present value
2018 2,213 3,365
2017 1,846 2,960
Both Mr. Siemssen and Dr. Burkhardt opted for pension option (3) comprising
20% of the fixed salary and 20% of the short-term variable cash remuner-
ation. The 20% of the fixed salary is paid on February 28 of each year and
the 20% of the short-term variable cash remuneration is paid along with
short-term variable cash remuneration.
Total compensation in accordance with IFRS is presented in the following
table:
in EUR k 2018 2017
Fixed remuneration 6,157 2,154
Non-cash remuneration 52 65
Total short-term non- performance-based remuneration 6,209 2,219
Short-term variable cash remuneration 664 1,009
Total short-term variable remuneration 6,873 3,228
Long-term variable cash remuneration 1,638 2,663
Phantom stocks vested in the financial year 1,684 1,781
Pension expenses 924 1,200
Total long-term remuneration 4,246 5,644
Total 11,119 8,872
86 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Remuneration Report
REMUNERATION OF THE SUPERVISORY BOARD
Supervisory Board remuneration is governed by Gerresheimer AG’s Articles
of Association.
All Supervisory Board members receive fixed annual remuneration of
EUR 30,000.00. The Chairman of the Supervisory Board is granted two and
a half times and the Deputy Chairman one and a half times this amount. The
Chairman of the Audit Committee receives an additional fixed remuneration
of EUR 20,000.00 and further members of the Audit Committee each receive
an additional fixed remuneration of EUR 10,000.00. Chairmen of other
committees receive an additional fixed remuneration of EUR 10,000.00 for
each chairmanship and further members of other committees each receive
an additional remuneration of EUR 5,000.00 for each committee member-
ship. This provision does not apply to the committee in accordance with
section 27 (3) German Codetermination Act (MitbestG). Remuneration for the
chairmanship and membership of the Nomination Committee is restricted to
years in which the Committee meets. In addition to their annual remunera-
tion, Supervisory Board members each receive a EUR 1,500.00 attendance fee
for meetings of the Supervisory Board and of Supervisory Board committees
to which they belong, capped at a maximum of EUR 1,500.00 per calendar
day. Reasonable expenses are reimbursed against receipts.
Supervisory Board members additionally receive variable remuneration. This
comprises EUR 100.00 for each EUR 0.01 of Gerresheimer AG’s average
adjusted earnings per share in the financial year under review and the two
preceding financial years, provided that this amount is at least EUR 0.50.
If Gerresheimer AG’s average adjusted consolidated earnings per share
exceeds EUR 3.00, the excess is not taken into account in calculating the
variable remuneration. Adjusted earnings per share is defined as net income
in the Consolidated Financial Statements before non-cash amortization of
fair value adjustments, the non-recurring effect of restructuring expenses,
portfolio adjustments and the net sum of one-off income/expense (including
significant non-cash expenses) inclusive of related tax effects, based on net
income attributable to non-controlling interests, divided by shares issued
at the reporting date. The Chairman of the Supervisory Board is granted
two and a half times and the Deputy Chairman one and a half times the
amount of this variable remuneration.
Total remuneration of Supervisory Board members for their activity on the
Supervisory Board of Gerresheimer AG in the financial year 2018 came to
EUR 1,140,500.00.
The remuneration of individual Supervisory Board members is made up as
follows:
NameAttendance
feesFixed
remunerationVariable
remuneration Total
Andrea Abt 12,000.00 40,000.00 30,000.00 82,000.00
Heike Arndt 12,000.00 30,000.00 30,000.00 72,000.00
Dr. Karin Dorrepaal 10,500.00 30,000.00 30,000.00 70,500.00
Francesco Grioli 27,000.00 60,000.00 45,000.00 132,000.00
Franz Hartinger 12,000.00 30,000.00 30,000.00 72,000.00
Dr. Axel Herberg 28,500.00 95,000.00 75,000.00 198,500.00
Dr. Peter Noé 12,000.00 30,000.00 30,000.00 72,000.00
Markus Rocholz 27,000.00 45,000.00 30,000.00 102,000.00
Paul Schilling 12,000.00 30,000.00 30,000.00 72,000.00
Katja Schnitzler 13,500.00 40,000.00 30,000.00 83,500.00
Theodor Stuth 13,500.00 50,000.00 30,000.00 93,500.00
Udo J. Vetter 25,500.00 35,000.00 30,000.00 90,500.00
205,500.00 515,000.00 420,000.00 1,140,500.00
Supervisory Board member Franz Hartinger was appointed to the Supervisory
Board of Gerresheimer Regensburg GmbH as of January 2, 2017. He receives
appropriate remuneration for this Supervisory Board membership after the
end of each financial year. The remuneration amount is determined by
resolution of the ordinary shareholders’ meeting of Gerresheimer Regensburg
GmbH. The shareholders’ meeting set the amount of remuneration for the
duration of his appointment in the financial year 2017 at EUR 5,000.00,
which was paid out in the financial year 2018.
Supervisory Board member Markus Rocholz receives remuneration of
EUR 5,000.00 after the end of each financial year for his membership of
the Supervisory Board of Gerresheimer Tettau GmbH. The remuneration for
the financial year 2017 was paid out in the financial year 2018.
Supervisory Board member Paul Schilling was appointed to the Supervisory
Board of Gerresheimer Bünde GmbH as of May 25, 2018. Appropriate remu-
neration for the financial year 2018 for this Supervisory Board membership
from Mr. Schilling’s appointment date and for the remainder of the financial
year 2018 will be paid out in the financial year 2019.
87GROUP MANAGEMENT REP ORT› Remuneration Report
In accordance with section 84 of the German Stock Corporation Act (Aktien-
gesetz/AktG), members of the Management Board are appointed by the
Supervisory Board for a maximum of five years. Repeat appointments or
extensions of the term of office are permissible, in each case for a maximum
of five years. The Supervisory Board may revoke the appointment of a
Management Board member prior to the end of the term of office either
for cause such as gross breach of duty or if the General Meeting withdraws
its confidence in the member concerned.
The Company is represented either by two members of the Management
Board or by one member of the Management Board and an authorized
signatory (Prokurist).
In accordance with section 179 AktG, amendments to the Articles of
Association normally require a resolution of the Annual General Meeting.
Excepted from this rule are amendments to the Articles of Association that
relate solely to their wording. The Supervisory Board is authorized to make
such changes. Unless otherwise required by law, Annual General Meeting
resolutions are adopted by simple majority of votes cast. If a majority of
capital is additionally required by law, resolutions are adopted by simple
majority of the capital stock represented upon adoption of the resolution.
Authority of the Management Board to issue or buy back shares
Under section 4 (4) of the Articles of Association, the Management Board is
authorized, subject to Supervisory Board approval, to increase the Company’s
capital stock by issuing new no-par-value bearer shares for cash or non-cash
consideration in one or more issues up to a total of EUR 6.28m by or before
April 25, 2019. Increases in the capital stock effected as a result of exercising
other authorizations based on authorized or conditional capital during the
period of this authorization are taken into account against the increase.
Shareholders must normally be granted subscription rights. The subscription
right may also be granted in such a way that the shares are taken up by one
or more banks or equivalent undertakings within the meaning of the first
sentence of section 186 (5) of the AktG with an obligation to offer them
to the Company’s shareholders for subscription (indirect subscription right).
The Management Board is authorized, subject to Supervisory Board approval,
to exclude shareholders’ subscription rights in the following instances:
› to exclude fractional amounts from the subscription right;
› to the extent necessary to grant holders of conversion rights or warrants or
parties under obligation to exercise conversion rights or warrants attached
to bonds or yet to be issued by the Company or a Group company a
subscription right to new shares to the same extent as they would be
entitled to as shareholders after exercise of the warrant or conversion right
or fulfillment of the obligation to exercise the warrant or conversion right;
› in the event of capital increases for non-cash consideration in connection
with business combinations or acquisitions of companies in whole or
part or of shareholdings, including increases in existing shareholdings or
other assets;
DISCLOSURES PURSUANT TO SECTION 315a (1) HGB AND EXPLANATORY REPORT
Gerresheimer AG is a German stock corporation (Aktiengesellschaft) and has
issued voting stock that is listed on the regulated market of the Frankfurt
Stock Exchange (Prime Standard), a regulated market within the meaning
of section 2 (7) of the German Securities Acquisition and Takeover Act
(Wertpapiererwerbs- und Übernahmegesetz/WpÜG).
Structure of subscribed capital
The subscribed capital (capital stock) of Gerresheimer AG totaled EUR 31.4m
as of November 30, 2018. It is divided into 31.4 million ordinary no-par-value
bearer shares with a nominal share in capital stock of EUR 1.00 each. The
Company’s capital stock is fully paid in.
Restrictions on voting rights or on the transfer of securities
As of the balance sheet date, there were no restrictions on voting rights
or on the transfer of Gerresheimer AG shares by law, under the Articles of
Association, or otherwise to the knowledge of the Management Board. All
no-par-value shares in Gerresheimer AG issued as of November 30, 2018
are fully transferable, carry full voting rights and grant the holder one vote
in General Meetings.
Shareholdings exceeding 10% of voting rights
As of November 30, 2018, we are not aware of any direct or indirect share-
holdings in the Company’s capital stock exceeding 10% of voting rights.
Shares carrying special rights with regard to control
None of the shares issued by Gerresheimer AG have rights which confer
special control to their bearer.
System of control of any employee share scheme where the
control rights are not exercised directly by the employees
We have no information with regard to the system of control of any employee
share scheme where the control rights are not exercised directly by the
employees.
Legal provisions and provisions of the Articles of Association
on the appointment and replacement of Management Board
members and on amendments to the Articles of Association
The Management Board is the legal management and representative body of
Gerresheimer AG. In accordance with the Company’s Articles of Association,
it comprises at least two members. In all other respects, the Supervisory
Board determines the number of members of the Management Board. The
Supervisory Board may appoint deputy members of the Management Board.
It appoints one member of the Management Board as CEO or speaker.
88 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Disclosures pursuant to Section 315a (1) HGB and Explanatory Report
› in the event of capital increases for cash consideration if the issue price
of the new shares is not substantially below that of the existing, listed
shares at the time of final fixing of the issue price by the Management
Board within the meaning of section 203 (1) and (2) and section 186 (3)
sentence 4 AktG, and the percentage of capital stock attributable to the
new shares for which the subscription right is excluded does not exceed
10% of the capital stock in existence at the time the authorization comes
into effect or at the time the authorization is exercised, whichever amount
is smaller.
The total sum of shares issued for cash or non-cash consideration subject to
exclusion of subscription rights under this authorization may not exceed a
EUR 3.14m share of capital stock (10% of the current capital stock). Shares
issued or sold during the period of this authorization under exclusion of
shareholders’ subscription right in direct or analogous application of sec-
tion 186 (3) sentence 4 AktG are to be set against the maximum limit of
10% of the capital stock. The same set-off rule applies to shares to be issued
to service bonds with a conversion right or warrant or obligation to exercise
a conversion right or warrant to the extent that the bonds are issued during
the period of this authorization under exclusion of the subscription right by
analogous application of section 186 (3) sentence 4 AktG.
The Management Board is authorized, subject to Supervisory Board approval,
to stipulate other details of the capital increase and its execution, including
the substantive details of rights attached to shares and the conditions of issue.
We further refer in this connection to our disclosures under “Restrictions on
Voting Rights or on the Transfer of Securities”.
The capital stock is conditionally increased by up to EUR 6,280,000 by the
issue of up to 6,280,000 new no-par-value bearer shares. The conditional
capital increase serves the purpose of granting no-par-value bearer shares
to holders of convertible bonds or warrant bonds (or combinations of these
instruments) (together “bonds”) with conversion rights or warrants or obli-
gations to exercise conversion rights or warrants, which on the basis of the
authorization approved by resolution of the Annual General Meeting on
April 26, 2017 are issued by or before April 25, 2019 by the Company or
a Group company within the meaning of section 18 AktG. Increases in the
capital stock effected as a result of exercising other authorizations for the
issue of shares based on authorized or conditional capital during the period
of this authorization are taken into account against the increase. The new
shares will be issued at the conversion or warrant price to be determined in
each case in accordance with the authorization resolution described above.
The conditional capital increase is to be carried out only to the extent that
conversion rights or warrants are used or obligations to exercise a conversion
right or warrant are fulfilled and no other forms of fulfillment are employed.
New shares issued because of the exercise of conversion rights or warrants or
fulfillment of obligations to exercise conversion rights or warrants participate
in earnings from the beginning of the financial year in which they are issued.
The Management Board is entitled to stipulate further details with regard
to execution of the conditional capital increase subject to Supervisory Board
approval.
Material agreements conditional on a change of
control following a takeover bid
The loans under the credit facilities with a total facility amount of EUR 450.0m,
of which EUR 264.4m was drawn at the reporting date, may be terminated
by the lenders, and would consequently be repayable early and in full by the
borrowers, if a third party or several third parties acting in concert were to
acquire 50.01% or more of voting rights in Gerresheimer AG.
Bond holders are each entitled to call due their bonds if any party, or any
group of parties acting in concert, directly or indirectly acquires the right to
appoint the majority of members of the Supervisory Board of Gerresheimer AG
or directly or indirectly acquires more than 50% of the shares or voting rights
in Gerresheimer AG.
A change of control following a takeover bid may impact a number of our
operating contracts featuring change-of-control provisions. These are standard
change-of-control clauses that give the other party to the contract a right
to terminate the contract prematurely in the event of a change of control.
Compensation agreements for the event of a takeover bid
In the event of a change of control, Management Board members have a
once-only special right to terminate their contracts at six months’ notice
effective as of the end of the month and to resign as of the end of the notice
period. The special right of termination applies solely within three months
of the point in time at which the Management Board member gained—or
were it not for gross negligence would have gained—knowledge of the
change of control. The special right of termination only applies if, at the
date notice is given, the contract has a remaining term of nine months or
more. If a Management Board member exercises his or her special right of
termination, the Company is required to pay termination benefit equal to
three times the annual remuneration less amounts paid during the notice
period. Annual remuneration is defined as remuneration for the full financial
year, including short-term and long-term variable cash remuneration, but
excluding long-term share-price-based variable cash remuneration.
89GROUP MANAGEMENT REP ORT› Disclosures pursuant to Section 315a (1) HGB and Explanatory Report
CORPORATE GOVERNANCE STATEMENT
The declaration on corporate governance under sections 315d and 289f
of the German Commercial Code (Handelsgesetzbuch/HGB) is part of the
Group Management Report. However, in accordance with section 317 (2)
sentence 6 HGB, this information was not included in the audit of the
Consolidated Financial Statements.
DECLARATION OF COMPLIANCE WITH THE GERMAN CORPORATE GOVERNANCE CODE
The Management Board and Supervisory Board of Gerresheimer AG most
recently adopted the following Declaration of Compliance in accordance
with section 161 AktG on September 6, 2018:
“Declaration of the Management Board and the Supervisory Board of
Gerresheimer AG on the recommendations of the “Government Commission
on the German Corporate Governance Code” according to section 161 of
the German Stock Corporation Act.
With the exception of the recommendation of number 5.4.1, paragraph 2
sentence 2 Gerresheimer AG has complied with all recommendations of the
“Government Commission on the German Corporate Governance Code” as
amended on February 7, 2017 since its last declaration on September 5, 2017.
Gerresheimer AG will in future comply with all recommendations of the
“Government Commission on the German Corporate Governance Code” as
amended on February 7, 2017, again with the following exception:
Number 5.4.1, paragraph 2 sentence 2: The Supervisory Board has not
defined a regular limit for length of membership on the Supervisory Board.
Justification: Suitability for performing the duties of the Supervisory Board
depends in our opinion solely on the respective requirements of the company
and the individual competencies of the Supervisory Board members. We do
not consider it to be meaningful to set a regular limit for length of membership
of the Supervisory Board as the expert knowledge of experienced Supervisory
Board members should be available to the company.”
INFORMATION ON CORPORATE GOVERNANCE PRACTICES
RISK MANAGEMENT SYSTEMThe Gerresheimer Group considers effective risk management a key factor
in sustaining value for the long term. The management of opportunities and
risks is therefore integral to our organizational structure and processes. The
risk management system centers on identifying and mitigating operational
risks through the monitoring, planning, management and control systems
in place within the entities and at headquarters.
We have defined guidelines on risk reporting for subsidiaries and key head
office functions. Furthermore, we continuously expand our early warning
system and adapt it to the latest developments. Core elements of the risk
management system are described in the “Report on Opportunities and
Risks” section of the Group Management Report, which is also available
on our website at www.gerresheimer.com/en/investor-relations/reports.
CORPORATE RESPONSIBILITYGerresheimer is one of the leading partners to the pharma and healthcare
industry worldwide. As manufacturers of products made from glass and
plastic for drug packaging and delivery, we make a meaningful and significant
contribution to health and well-being.
In this age of increasing globalization as well as growing social and environ-
mental challenges, we are conscious of our corporate responsibility, which
goes far beyond the realm of our products. We meet this responsibility
actively, comprehensively and sustainably, and are happy to be measured
against our principles. In our business activities, we acknowledge our
responsibility toward society, our employees, investors, customers, suppliers
and the environment.
Our principles are set out in the publication “Our Corporate Responsibility”,
which is available for viewing on our website at www.gerresheimer.com/
en/company/corporate-social-responsibility.
DESCRIPTION OF MANAGEMENT BOARD AND SUPERVISORY BOARD PROCEDURES AND OF THE COMPOSITION AND PROCEDURES OF THEIR COMMITTEESThe composition of the Management Board and Supervisory Board can be
found in the Annual Report under “Supervisory Board and Management
Board”. The working practices of the Management Board and Supervisory
Board as well as the composition and working practices of Supervisory Board
committees are described in the Annual Report as part of the Corporate
Governance Report. The Annual Report is also available on our website at
www.gerresheimer.com/en/investor-relations/reports.
90 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Corporate Governance Statement
STIPULATION OF TARGETS TO PROMOTE THE PARTICIPATION OF WOMEN IN MANAGEMENT POSITIONS IN ACCORDANCE WITH SECTIONS 76 (4), 96, AND 111 (5) AKTGUnder the German Act on Equal Participation of Women and Men in Execu-
tive Positions in the Private and Public Sector of April 24, 2015, certain
companies in Germany are required to stipulate targets for the percentage
of women on the Supervisory Board, Management Board and the two
management levels under the Management Board, and also to specify by
what point in time the quotas are to be attained. The companies subject to
this requirement disclose whether the stipulated targets are attained during
the reference period and if not, why not. At its meeting on April 26, 2017,
the Supervisory Board agreed on a target for the percentage of women on
the Gerresheimer AG Management Board of one woman by April 26, 2022.
By resolution of June 28, 2017, the Management Board of Gerresheimer AG
stipulated targets of 25% each by June 30, 2018 for the two management
levels under the Management Board. At the first management level under
the Management Board, the percentage of women was just 20% as of
June 30, 2018. This was due to an absence of changes in management
during the reference period, which prevented the percentage of women
at this level from increasing above the 20% at the time the target was
adopted. At the second management level under the Management Board,
the percentage of women as of June 30, 2018 was 33%, thus surpassing
the target for this level. On May 28, 2018, the Management Board set
new targets for June 30, 2023 for the two management levels under the
Management Board. These targets are 20% for the first management level
under the Management Board and 33% for the second management level
under the Management Board.
With regard to the percentage of women on the Supervisory Board for com-
panies such as Gerresheimer AG that are both listed on the stock exchange
and subject to codetermination, a statutory minimum quota of 30% women
and 30% men has been in place since January 1, 2016. These requirements
have already been met by Gerresheimer AG since its Annual General Meeting
on April 30, 2015. The Supervisory Board formed at the end of the Annual
General Meeting on April 26, 2017 consists of four women (33.3%) and
eight men (66.7%).
DIVERSITY POLICY FOR THE MANAGEMENT BOARD AND SUPERVISORY BOARD
DIVERSITY POLICY FOR THE MANAGEMENT BOARDThe Supervisory Board considers numerous factors when filling Management
Board positions, notably including the following:
› Members of the Management Board are expected to have held manage-
ment responsibility for several years
› The Management Board as a whole is required to have several years of
experience in the areas of production, sales, finance, planning, human
resources management, legal affairs and compliance
› At least one member of the Management Board is required to have capital
market experience
› Members of the Management Board are expected to have international
experience
› Management Board members step down from the Management Board
at the age of 65
At the recommendation of the Presiding Committee, the Supervisory Board
decides on a case-by-case basis who is to be appointed to a given position
on the Management Board.
The Management Board members appointed at the end of the financial year
2018, some of whom will not take up office until the financial year 2019,
collectively meet the above criteria.
Currently, the Management Board consists exclusively of men. The Super-
visory Board has agreed on a target for the proportion of women on the
Management Board of one woman by April 26, 2022.
DIVERSITY POLICY FOR THE SUPERVISORY BOARDThe Supervisory Board must be composed in such a way that its members as
a group possess the knowledge, skills and professional experience required to
properly complete its tasks. When proposing candidates for the Supervisory
Board, care is taken to ensure a balanced composition, notably taking into
account the following elements:
› At least two representatives of the shareholders are required to have exper-
ience in the fields of business management, strategy and human resources
› At least one representative is required to have Company-specific knowledge
of the industry
› At least one shareholder representative is required to have specific knowl-
edge on the customer side
› Supervisory Board members should not have any function in a controlling
body or any advisory functions for significant competitors of the Company
or a Group company
› Supervisory Board members should not take on any active role with cus-
tomers or suppliers of the Company or a Group company
› No more than two members of the Supervisory Board should be former
Management Board members of the Company
› At least four out of six representatives of the shareholders on the Super-
visory Board should be independent
› The term of office of Supervisory Board members ceases at the end of the
first Annual General Meeting following a member’s seventieth birthday
› At least one representative of the shareholders should have several years’
professional international business experience or be of foreign nationality
› The minimum percentages of women and men on the Supervisory Board
follow statutory requirements, as amended
In its current composition, the Supervisory Board meets the aforementioned
criteria for the Supervisory Board as a whole.
Further information about the profile of skills and experience for the com-
position of the Supervisory Board is provided under “Corporate Governance
Report”.
91GROUP MANAGEMENT REP ORT› Corporate Governance Statement
REPORT ON OPPORTUNITIES AND RISKS
UNIFORM GROUP-WIDE MANAGEMENT OF OPPORTUNITIES AND RISKS
As a globally operating Company, we are regularly confronted with develop-
ments and events that can have either a positive or a negative effect on
our net assets, financial position and results of operations. It is only our
willingness to enter into entrepreneurial risks that enables us to seize oppor-
tunities. Up to a defined risk tolerance level, we therefore consciously enter
into risks if they offer a balanced opportunity-risk profile.
We fundamentally address risk management and opportunity management
separately. Our risk management system identifies, assesses and documents
risks and supports their monitoring. Opportunities, on the other hand, are
identified and communicated as an integral part of regular communications
between the subsidiaries and the control function at Gerresheimer AG in
its capacity as holding company.
The central element of the risk management system consists in identifying
and mitigating operational risks through the monitoring, planning, manage-
ment and control systems in place within the entities and the management
holding company. In our risk management strategy, we aim to identify risks
as early as possible, to assess them, to prevent or mitigate potential impacts
by taking suitable actions and, where applicable, to transfer identified risks
to third parties. Not even a risk management system can provide an absolute
guarantee that risks will be avoided. But it does help us in limiting them
and hence in attaining our business targets.
Responsibility for establishing and effectively maintaining the risk manage-
ment system lies with the Management Board and Supervisory Board of
Gerresheimer AG. The legal representatives of our operating companies and
the management of key head office functions are additionally involved in
monitoring, promptly identifying, analyzing, managing and communicating
risks. We have drawn up guidelines on risk reporting for our subsidiaries and
key head office functions. Furthermore, we continuously fine-tune our risk
management system and adapt it to current developments and conditions.
To coordinate risk management throughout the Group and foster an
integrated risk management philosophy, the Management Board of
Gerresheimer AG has established a Risk Committee. This is composed of
the Chief Financial Officer, who chairs the committee, and the heads of
Controlling, Internal Audit, Legal Affairs & Compliance, Accounting, and
Global Risk Management & Insurance. Its primary remit is to scrutinize risks
in the risk report and to further improve and monitor methods and tools
in the risk management system. The Risk Committee meets on a quarterly
basis in step with the schedule for risk reporting to the Management Board
and Supervisory Board.
The main elements of the Group-wide risk management system are as
follows:
› Uniform, periodic risk reporting to head office by subsidiaries
› Regular risk assessment in key central departments
› Risk segmentation into corporate-strategy, external and industry-specific,
operational and financial risks
› Quantification of risks in terms of potential financial impact and probability
› Recording of effects on profit or loss by business unit
› Mitigation and risk reduction by damage prevention and risk transfer
Where identified risks are already included in operational and strategic
plans, in our forecast or in monthly, quarterly or annual financial state-
ments, they are not included in risk reporting. This avoids double counting
in Gerresheimer AG’s risk management system. Risks are similarly excluded
where no further assessment is needed to determine that the probability
of occurrence is effectively nil (such as the risk of disastrous earthquakes in
Germany). Risk reporting covers risks but not opportunities.
The Gerresheimer Group applies a number of risk management principles.
These stipulate zero risk tolerance for breaches of official regulations and
laws or the Company’s compliance requirements, as well as for defective
products and product quality shortfalls.
As a process-independent element of our risk management system, the
Internal Audit Department appraises the effectiveness and proper functioning
of the early warning system at regular intervals. In addition, the external
auditors assess the early warning system as part of the audit of the Annual
Financial Statements and report on this to the Management Board and Super-
visory Board. Our early warning system is in full conformity with statutory
requirements and also with the German Corporate Governance Code.
INTERNAL CONTROL SYSTEM IN RELATION TO THE FINANCIAL REPORTING PROCESS
The Consolidated Financial Statements of the Gerresheimer Group are pre-
pared in accordance with the International Financial Reporting Standards
(IFRS) of the International Accounting Standards Board (IASB) as adopted by
the European Union and with the supplementary requirements applicable
under section 315e (1) of the German Commercial Code (Handelsgesetzbuch/
HGB). The Annual Financial Statements of Gerresheimer AG are prepared in
accordance with the provisions of the German Commercial Code and the
German Stock Corporation Act (Aktiengesetz/AktG).
92 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Report on Opportunities and Risks
The overriding objective of our internal control and risk management system
in relation to the financial reporting process is to ensure compliance in
financial reporting. Establishing and effectively maintaining adequate internal
controls over financial reporting is the responsibility of the Management
Board and Supervisory Board of Gerresheimer AG, which assess the adequacy
and effectiveness of the control system at each financial year-end. The
internal controls over financial reporting were found to be appropriate and
effective as of November 30, 2018.
We prepare the Consolidated Financial Statements in a multistage process
using recognized consolidation systems. The audited, preconsolidated
financial statements of the subgroups and the audited or reviewed financial
statements of the other subsidiaries are combined to produce the Consoli-
dated Financial Statements of Gerresheimer AG. Gerresheimer AG has
responsibility for the uniform Group-wide chart of accounts, for carrying out
central consolidation adjustments, as well as for scheduling and organizing
the consolidation process.
Uniform guidelines on accounting in accordance with IFRS are in place for the
companies included in the Consolidated Financial Statements. These include
a description of the general consolidation methods as well as the applicable
accounting policies in accordance with IFRS. Continuously updated to reflect
changes to the IFRSs, the guidelines are available on the Gerresheimer
intranet to all employees at subsidiaries. There is also a binding schedule
for the financial close process.
In the course of the financial close process, balance sheets, income state-
ments and statements of comprehensive income are produced in the system
along with information relevant to the cash flow statement, the statement
of changes in equity, the notes and the management report. Effective
maintenance of the system is provided centrally by Group Accounting. In
addition to the automated checks that are in place, manual data complete-
ness and accuracy checks are carried out by the operating companies and
head office. The professional aptitude of employees involved in the financial
reporting process is examined during their selection process, after which
they receive regular training. We fundamentally apply the dual control
principle. Other control mechanisms include target-actual comparisons
as well as analyses of the content of and changes in the individual items.
Accounting ensures that function-related information is reported by the
relevant departments and incorporated into the Consolidated Financial
Statements. Our Internal Audit Department reviews the effectiveness of
the controls implemented at the subsidiaries and head office in order to
ensure compliance with financial reporting guidelines. As part of the 2018
year-end audit, the auditors examined our early warning system in accor-
dance with section 317 (4) HGB in conjunction with section 91 (2) AktG
and confirmed its compliance.
We prepare the Annual Financial Statements of Gerresheimer AG using
the SAP software system. Day-to-day accounting and the preparation of
the Annual Financial Statements are divided into functional process steps.
Either automated or manual controls are integrated into all process steps.
The organizational arrangements ensure that all business transactions and
the preparation of the Annual Financial Statements are completed in a
timely and accurate manner and are processed and documented within
the appropriate time frame. The relevant data from Gerresheimer AG’s
single-entity financial statements is transferred into the consolidation system
and adjusted as necessary to comply with IFRS.
The Supervisory Board is also involved in the control system through its
Audit Committee. In particular, the Audit Committee oversees the financial
reporting process, the effectiveness of the control, risk management and
internal audit systems as well as the audit of the financial statements. It is
also responsible for checking the documents related to Gerresheimer AG’s
single-entity financial statements and the Consolidated Financial Statements,
and discusses Gerresheimer AG’s single-entity financial statements, the
Consolidated Financial Statements and the management reports on those
financial statements with the Management Board and the auditors.
OPPORTUNITIES OF FUTURE DEVELOPMENTS
The Gerresheimer Group has a wide range of opportunities open to it due
to its extensive, global business activities. We aim to continue making the
best possible use of opportunities into the future.
Notable potential for opportunities is offered by our Technical Competence
Centers (TCC). These development centers are an important resource that
sets us apart and enables us to create decisive added value for customers.
By investing in our technology center for glass syringes and medical plastic
systems, for example, we aim in the future to enhance existing products in
collaboration with customers and to further diversify our product portfolio
as a whole. We also plan to create a portfolio tailored to the biotech sector,
comprising existing Gerresheimer products supplemented on a targeted
basis by further enhancements and new developments. More details on our
research and development activities are given in the “Innovation, Research
and Development” section.
We also see strategic opportunities in the further globalization of our
business. As part of this, we plan to benefit from the dynamic growth of
emerging markets by extending our local presence and significantly increasing
revenues in such markets in the years ahead. In recent years, we have paved
the way for further growth through selective investment in Brazil, India and
China. Expanding the business activities of our Plastics & Devices Division in
North America promises additional growth.
93GROUP MANAGEMENT REP ORT› Report on Opportunities and Risks
Generic drug makers will gain in importance going forward. We aim to secure
a share of the expected volume growth, because generics also require proper
packaging and administration. Drug packaging that enhances safety and ease
of use is another segment set to grow in importance.
We see additional growth opportunities in demographic change as well as in
increased demand for healthcare among older people, advances in medical
technology and in the field of biotech drugs.
RISKS OF FUTURE DEVELOPMENTS
The Gerresheimer Group is exposed to a wide range of risks due to its extensive,
global business activities. To the extent that the criteria for accounting recog-
nition are met, appropriate provision has been made for all identifiable risks.
The following sections describe risks that could affect the Gerresheimer
Group’s net assets, financial position and results of operations. The probability
of occurrence of these risks is assessed according to the following criteria:
› Improbable = Probability of occurrence <10%
› Possible = Probability of occurrence between 10% and 50%
Risks with a probability of occurrence of more than 50% are recognized
and are taken into account in planning where possible.
The potential financial implications of these risks are assessed by the following
criteria:
› Moderate = Net loss of up to EUR 10m
› Significant = Net loss of more than EUR 10m
The net loss relates to the potential loss in the event of a risk materializing,
taking into account the effects of risk mitigation measures.
OVERVIEW OF RISKS AND THEIR FINANCIAL IMPLICATIONS
ProbabilityPossible
implications
Business strategy risks
Risks from acquisitions improbable significant
Risks from product launches possible significant
External and industry-specific risks
Customer market risk possible moderate
Marcoeconomic risks possible significant
Risks of change in regulatory environment possible significant
Risks from the future development of state healthcare systems possible significant
Tax risks possible moderate
Operational risks
Production risks possible moderate
Product liability risks possible significant
Risks from energy and raw material prices possible significant
Human resources risks possible moderate
IT risks possible moderate
Legal risks possible moderate
Financial risks
Currency and interest rate risk improbable moderate
Credit risk improbable significant
Liquidity risk improbable moderate
Existing risks are discussed in detail in the following.
BUSINESS STRATEGY RISKS
RISKS FROM ACQUISITIONSPotential impacts:
Acquisitions are an integral part of our strategy. Corporate acquisitions
harbor the risk of not all material risks being identified in due diligence.
Despite careful due diligence, changes in circumstances can mean that initial
targets are not met in whole or in part.
Countermeasures:
Functional departments and, where applicable, outside specialists are involved
from an early stage to ensure close scrutiny of acquisition projects during
due diligence. The process as a whole is managed by our Group Strategy,
Mergers & Acquisitions Department in collaboration with the divisions.
We aim to identify risks as early as possible by closely and continuously
monitoring the market and competition, and to mitigate or minimize them
by taking suitable countermeasures.
94 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Report on Opportunities and Risks
RISKS FROM PRODUCT LAUNCHESPotential impacts:
The market launch of innovative products—in close consultation with our
customers—is a key component of our growth strategy. In the context of
our management responsibility, we are fully aware that this entails risks as
well as opportunities. Despite our best efforts, we cannot guarantee that
all products will be commercially successful on the market.
Countermeasures:
On the basis of comprehensive market analyses and contracts with customers,
we ensure that the opportunities arising from a successful product launch
are maximized and potential risks minimized.
EXTERNAL AND INDUSTRY-SPECIFIC RISKS
CUSTOMER MARKET RISKPotential impacts:
Business cycle risks relating to macroeconomic developments can restrict
our market prospects and thus put sales at risk. Demand could also develop
negatively due to conscious purchasing restraint on the part of our customers.
If the market were not ready to absorb additional supply volumes, competitive
pressure could increase for an interim period as a result. Furthermore, within
the scope of existing capacity, competitors could try to gain additional or
lost market share by increasing supply. A fall in demand could also lead to
increasing competitive pressure. Significant changes in capacity and capacity
utilization, increases in supply by individual competitors within the scope
of existing capacity and longer-run reductions in demand could have a
substantial impact on pricing and/or on sales opportunities.
Countermeasures:
To improve competitiveness, we are working among other things to further
improve our cost structure and organizational structure and to expand our
product portfolio. We watch the market and aim to make targeted use of
opportunities. In the event of sustained changes, we apply measures such
as focusing capacity utilization on high-productivity production plants.
MACROECONOMIC RISKSPotential impacts:
For the Gerresheimer Group, the performance of the global economy has
a key impact on growth. Currently, in its October forecast, the IMF expects
global economic growth of 3.7% for 2018 and similarly global economic
growth of 3.7% for 2019. Any slowdown in global economic growth there-
fore represents a risk for the Gerresheimer Group’s revenue and earnings
performance.
Countermeasures:
We meet this risk by constantly monitoring global economic trends. In the
event of any change, we apply measures such as focusing capacity utilization
on high-productivity production plants.
RISKS OF CHANGE IN THE REGULATORY ENVIRONMENTPotential impacts:
Regulatory requirements tend to increase in quantity and scope from year
to year. While delivering major benefits to patients, this presents major
challenges for everyone in the market. Especially in European industrialized
countries and the USA, policymakers attach great importance to proof of
significant therapeutic added value before new drugs are approved. For this
reason, the competent authorities usually carry out a detailed cost-benefit
analysis before any new drug can be released onto the market. This cre-
ates risk with regard to the timing and volume of new drug launches and
corresponding risk to sales of our primary packaging. Furthermore, rising
quality expectations among our customers can create a need for increased
capital expenditure.
Countermeasures:
We address these risks by working continuously on our own quality require-
ments. In addition, we back up our customers’ sales forecasts with our own
analysis.
RISKS FROM THE FUTURE DEVELOPMENT OF STATE HEALTHCARE SYSTEMSPotential impacts:
In the financial year 2018, Gerresheimer generated some 82% of revenues
in the pharma and healthcare segment. Governments and health insurance
funds in Europe and the US have endeavored to curb the rate of increase in
healthcare costs in recent years. The result has been increased price pressure
in the pharma industry, where the need for cost control has intensified due to
limited patent protection and the constant rise in product development costs.
This trend can similarly lead to increasing price pressure on our products,
although generally only a small percentage of the total price a consumer
pays for medication relates to pharmaceutical primary packaging. If the price
pressure is not offset by cost reductions or enhanced efficiency, this could
have a significant negative impact on our net assets, financial position and
results of operations.
Countermeasures:
Early identification of such developments as they emerge and active portfolio
management are therefore important elements of corporate management.
The Gerresheimer Group’s international and multi-market presence also
means that it is better placed to make up for cyclic fluctuations in individual
markets and countries than other companies lacking such a global lineup.
95GROUP MANAGEMENT REP ORT› Report on Opportunities and Risks
TAX RISKSPotential impacts:
Due to the globalization of its business, the Gerresheimer Group must
take into account a wide variety of international and country-specific rules
laid down by tax authorities. Tax risks can arise from failing to fully comply
with tax rules or due to differences in the tax treatment of specific matters
and transactions. In particular, tax audits and any resulting audit findings
involving interest and additional tax payments may have a negative impact
on the Group.
Countermeasures:
Tax risks are regularly and systematically examined and assessed. Any resulting
risk mitigation measures are agreed between Gerresheimer AG Group Tax
and the subsidiaries. In addition, Group-wide tax compliance guidelines
introduced in the financial year 2017 serve to document and verify effective
tax compliance management with the aim of systematically and preventively
ensuring compliance with statutory requirements and obligations together
with internal Group tax guidelines.
OPERATIONAL RISKS
Our definition of operational risks includes operating, human resources
and safety risk. Such risks are mitigated by taking out adequate insurance
cover and by placing stringent requirements on production, project and
quality management.
PRODUCTION RISKS Potential impacts:
Unfavorable circumstances and developments can lead to business interrup-
tions and damage at our plants. Alongside the cost of damage repair, the
main risk is of a business interruption leading to production downtime and
thus jeopardizing the fulfillment of our contractual obligations to customers.
Countermeasures:
To counter the risk of unplanned, longer-run production plant stoppage or
downtime, the Gerresheimer Group has established ongoing plant inspections
and preventive maintenance. We also continuously modernize our existing
production systems and invest in new, more modern plant and machinery.
The Gerresheimer Group uses insurance policies to guard against the financial
impacts of potential damage and associated production downtimes together
with any liability risk. By transferring risk to insurers in this way, we ensure
that the financial impact is limited to the agreed deductible. The financial
implications for the Group are therefore assessed as moderate. We currently
insure possible own loss or damage at replacement value under all-risk
property and other insurance policies. An all-risk business interruption policy,
which like the all-risk property policy is subject to appropriate deductibles,
currently protects us against potential loss of earnings in the event of business
interruption at our plants. The scope and substance of these insurance
policies are continually reviewed and modified as needed by our Global
Risk Management & Insurance department. We assess the probability of
occurrence and hence the potential impact of uninsured events as improbable
and moderate, respectively.
PRODUCT LIABILITY RISKS Potential impacts:
Despite internal measures to ensure product quality and safety, the
Gerresheimer Group cannot rule out the possibility of loss or damage for
customers and consumers from the use of packaging products and systems
manufactured. More exacting customer requirements in the direction of
zero defect tolerance pose special challenges for quality assurance. Potential
product liability risks are illustrated by the following examples: The supply
of defective products to customers could result in damage to production
facilities or even cause business interruption. For us, this could also mean
loss of reputation for the Gerresheimer Group. Furthermore, in combination
with medicines and ingredients sold by its pharma and healthcare industry
customers, faulty products produced by the Gerresheimer Group could
pose a health hazard to consumers. It cannot be ruled out that the Group
might lose customers as a result of any such event. Gerresheimer could
also be exposed to related liability claims such as claims for damages from
customers or product liability claims from consumers. Any product liability
claims made against Gerresheimer, especially in class actions in the USA,
could be substantial. There is also the risk of the Group potentially having
to bear substantial costs for recalls. Moreover, there is no guarantee that
Gerresheimer will be able to obtain adequate insurance cover in the future
at present terms and conditions. As these examples show, negative impacts
on the Gerresheimer Group’s net assets, financial position and results of
operations cannot be ruled out.
Countermeasures:
To avoid product liability claims, the Gerresheimer Group applies extensive
quality assurance measures. The quality assurance and defect resolution
process applied to our products is subject to continuous improvement and
refinement. In addition, product liability and recall cost insurance is intended
to largely cover any claims and liability risks incurred.
RISKS FROM ENERGY AND RAW MATERIAL PRICES Potential impacts:
Our energy requirements are consistently high, due in particular to the
energy-intensive combustion and melting processes in our high-temperature
furnaces. A significant rise in energy prices can have a substantial impact
on the Gerresheimer Group’s results of operations.
Another significant portion of production costs relates to raw materials for
the manufacture of glass and plastic. In the manufacture of plastic products,
we are reliant on primary products such as polyethylene, polypropylene and
polystyrene. The prices of these products largely depend on oil price trends.
96 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Report on Opportunities and Risks
Countermeasures:
To cushion against rising energy costs, we make use of the special com-
pensation arrangement in Germany for energy-intensive companies under
section 64 of the Renewable Energy Act (EEG) and also hedge against
increases in energy prices. We have also agreed price escalation clauses in a
number of contracts with customers. Over and above these, price fluctuations
in the procurement markets for raw materials are largely offset by hedging,
productivity gains and price increases.
HUMAN RESOURCES RISKSPotential impacts:
A skilled workforce is a key success factor in implementing our growth-driven
corporate strategy. If in future years we do not succeed in training, recruit-
ing and securing the long-term loyalty of sufficient numbers of qualified
personnel for our Company, this could have a considerable impact on our
business success. Demographic change and the resulting potential skills
shortage pose additional personnel risks in the medium to long term.
Countermeasures:
We counter these risks by positioning ourselves as an attractive employer
worldwide. Elements in this include competitive pay, occupation-specific
continuing education and training, structured succession planning and selec-
tive fostering of young talent. We also operate diversity-oriented personnel
policies and employ target group-specific personnel marketing.
IT RISKSPotential impacts:
Increasing use is made of computer-aided business and production processes
as well as of IT systems for internal and external communications. Major
disruption to—or even failure of—such systems can cause data loss and
obstruct business and production processes.
Countermeasures:
IT systems are standardized, harmonized, reviewed and improved Group-
wide to safeguard and enhance the security and efficiency of our business
processes. Minimum sectoral IT standards such as backups, redundant
data links and distributed data centers help to minimize downtime risk for
mission-critical systems such as SAP, websites and IT infrastructure compo-
nents. In the course of instituting measures for the General Data Protection
Regulation (GDPR), technical and organizational minimum standards were
established for all locations.
Implementation of the Group IT strategy approved by the Management Board
continued apace in the financial year 2018. This included the ongoing rollout
of the SAP 2 client strategy. In the area of applications, this notably involved
the migration of subsidiary Gerresheimer Boleslawiec S.A. (Poland) to the
strategic SAP template client and the related introduction of standardized
business processes. Other standardization activities included the ongoing
rollout of the SAP central customer relationship management (CRM) system
and the launch of an implementation project at the Medical Systems Business
Unit in the Plastics & Devices Division. The Plastics & Devices Division also
replaced its previous manufacturing execution system with ZEISS GUARDUS,
thus providing it with a state-of-the-art production control system. In the
Primary Packaging Glass Division, a new solution is being configured on the
basis of SAP Manufacturing Integration and Intelligence (MII). Concerning
infrastructure, we implemented further security-related and innovative
infrastructure and information security projects such as continuation of the
Future Client project with a global Gerresheimer Workplace using Microsoft
Office 2016 or Microsoft Office 365 for specific user groups, a collaboration
platform for improved in-house collaboration, and migration of the mail
system from IBM Lotus Notes to Microsoft Exchange Online and Outlook.
This project also includes global user training on Microsoft products featured
in the project and an IT security awareness campaign in eight languages. The
rollout of One Active Directory was completed as a requirement for the Future
Workplace project. An optimization of long-distance traffic connections
has been implemented in preparation for new requirements as well as to
improve efficiency and fault tolerance. This implementation safeguards
everyday operations from impacts of network failures.
Gerresheimer continues to harmonize ERP systems around SAP ERP Central
Component (SAP ECC) 6.0 on an ongoing basis as well as to standardize
IT network, hardware, communications and security infrastructure. IT
Governance and IT Compliance functions aim to ensure that statutory,
internal corporate and contractual requirements applying to Gerresheimer AG
are met and implemented.
LEGAL RISKSPotential impacts:
As an international enterprise, the Gerresheimer Group must comply with
differing laws in different jurisdictions. This can result in a wide range of risks
relating to contract, competition, environment, trademark and patent law.
Countermeasures:
We limit such risks by means of legal appraisal by our internal legal depart-
ments and by consulting external specialists on national law in the jurisdictions
concerned.
97GROUP MANAGEMENT REP ORT› Report on Opportunities and Risks
We have established a global compliance program to ensure compliance with
laws and regulations worldwide, especially in the areas of corruption preven-
tion, cartel law and capital market law. All board members and employees
of Gerresheimer AG and of all subsidiaries must abide by our compliance
guidelines. Adherence to the law and conformity with the guidelines under
the Gerresheimer Compliance Program are of paramount importance to
Gerresheimer AG and its affiliated companies.
We have no knowledge of risks from legal disputes that could have a signi-
ficant impact on the Gerresheimer Group’s net assets, financial position
and results of operations.
FINANCIAL RISKS
We are exposed to financial risks in our operating activities. The responsible
Group Treasury Department centrally monitors the financial risks facing the
Group by means of Group-wide financial risk management. The Group
manages identified risk exposures by using appropriate hedging strategies
on the basis of clearly defined guidelines.
CURRENCY AND INTEREST RATE RISKPotential impacts:
As a company headquartered in Germany, our Group and reporting currency
is the euro. Given that we conduct a large part of our business outside of
the eurozone, exchange rate fluctuations can have an impact on earnings.
The greater volatility of exchange rates in recent years has increased related
opportunities and risks. We are additionally exposed to interest rate risk in
borrowing. Interest rate fluctuations can alter the interest burden on existing
debt and the cost of refinancing.
Countermeasures:
We limit exchange rate risks in operating activities by using forward exchange
contracts. The Group uses derivative financial instruments exclusively to
hedge risk in connection with commercial transactions. We contain interest
rate risk where necessary by entering into interest rate swaps.
CREDIT RISKPotential impacts:
Credit risk on primary and derivative financial instruments comprises the
risk of counterparties being potentially unable to meet their contractual
payment and fulfillment obligations.
Countermeasures:
Through our credit and receivables management function as well as operating
company sales functions, we monitor credit risks resulting from the Group’s
trade relationships. Our customers undergo internal credit checks on an
ongoing basis in order to avoid losses on receivables. Receivables from
customers lacking a top credit rating are insured where insurance cover is
available. To avoid credit risks from financial instruments, such instruments
are only entered into with parties having top credit ratings.
LIQUIDITY RISKPotential impacts:
There is the risk of not being able to fulfill existing or future payment
obligations due to insufficient availability of funds.
Countermeasures:
The Group’s liquidity situation is monitored and managed on the basis of
multi-year financial planning and monthly liquidity planning. To safeguard
liquidity, the Gerresheimer Group additionally has available a revolving credit
facility and promissory loans issued in September 2017 and November 2015.
Reference is also be made here to the quarterly meetings of the Investment
Committee and its liquidity monitoring function.
A more detailed presentation of the financial risks and their management
can be found in the Notes to the Consolidated Financial Statements under
Note (6) “Financial Risk Management and Derivative Financial Instruments”.
RISKS RELATING TO THE CSR DIRECTIVE IMPLEMENTATION ACT
Risks to be reported on separately in connection with the aspects addressed
in the non-financial Group declaration as defined in the CSR Directive Imple-
mentation Act should, in our understanding, be rated in terms of probability
of occurrence at least as highly probable and in terms of potential financial
implications as significant. No such risks were identified in the reporting year.
OVERALL ASSESSMENT OF THE GROUP RISK SITUATION
The basis for the Management Board’s overall assessment of the risk situation
is provided by our risk management system. The risk reporting process collates
all risks reported by subsidiaries and head office functions. Risk reporting to
the Management Board and the Supervisory Board follows a regular cycle.
There was no significant change in the Gerresheimer Group’s risks in the
financial year 2018 compared with the prior year. Based on our overall risk
assessment, there are currently no risks that raise doubt about the ability of
the Gerresheimer Group or Gerresheimer AG to continue as a going concern
or that could have a material effect on its net assets, financial position and
results of operations.
The revolving credit facility is subject to a financial covenant in line with
prevailing market practices. This is described under “Financing instruments”.
The stipulated financial covenant was complied with in the financial years
2017 and 2018. Based on our multiple-year budget, we project that the
financial covenant will continue to be met in the future.
98 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Report on Opportunities and Risks
EVENTS AFTER THE BALANCE SHEET DATEAfter November 30, 2018, a customer of Sensile Medical terminated a
project without substantive reasons. According to the contract, purchase
price components in the amount of approximately EUR 90m will not be
paid out by Gerresheimer to the former shareholders of Sensile Medical.
The derecognition of the accounted liability will result in a positive effect
on adjusted EBITDA in the first quarter 2019 as well as a reduction of debt
at the end of the financial year 2019. Other than that, Gerresheimer Group
expects only little impact on revenues and adjusted EBITDA from the loss of
this project. Possible effects on the recoverability of the goodwill and the
technologies are currently being analyzed. Regardless of the outcome of the
analysis, this will not have material impacts on adjusted EBITDA.
Beyond that there were no further subsequent events after November 30,
2018 that are expected to have a material impact on the net assets, financial
position or results of operations of the Gerresheimer Group.
OUTLOOK
GROUP STRATEGIC OBJECTIVES
The following statements on the future business performance of the
Gerresheimer Group and of Gerresheimer AG, and the assumptions about
the economic development of the market and industry deemed significant
for this purpose, are based on our assessments, which we consider realistic
at the present time based on the information we have available. Those
assessments are subject to uncertainty, however, and entail the unavoidable
risk that actual performance may vary in direction or magnitude from the
projected performance.
DEVELOPMENT OF THE ECONOMIC ENVIRONMENT
GLOBAL AND REGIONAL ECONOMIC DEVELOPMENT5)
Expected growth in gross domestic product
Change in % 2019 2018
World 3.7 3.7
US 2.5 2.9
Eurozone 1.9 2.0
Germany 1.9 1.9
Emerging markets 4.7 4.7
China 6.2 6.6
India 7.4 7.3
Brazil 2.4 1.4
Russia 1.8 1.7 Source: International Monetary Fund: World Economic Outlook, October 2018.
The IMF6) forecasts global economic growth of 3.7% in 2019, the same
rate as is expected for 2018. This corresponds to a 0.2 percentage point
downgrade from the July forecast and, alongside US duties on Chinese
imports, is attributable to corrections in a number of regions where growth
was weaker than expected in the first half of the year.
For the US, the IMF expects growth to decrease from 2.9% in 2018 to
2.5% in 2019 and attributes this to the unwinding of stimulus from the
US tax reform.
As to the eurozone, estimates for 2019 likewise project a marginal decrease
in economic growth to about 1.9%—compared with growth of about
2.0% in 2018. Growth in this region was most recently below expectations
according to the IMF. For Germany, by contrast, the IMF expects growth in
2019 to match the prior-year level of 1.9%.
The IMF’s growth rate forecast for emerging markets in 2019 is 4.7%, which
is again equal to the figure expected for 2018. Specifically, the IMF expects
6.2% GDP growth for China (2018: 6.6%) and an increase of 7.4% for
India (2018: 7.3%); in Brazil, GDP is projected to show growth of 2.4%
(2018: 1.4%).
MARKET AND BUSINESS OPPORTUNITIES FOR THE GERRESHEIMER GROUP
PROSPECTS FOR THE FINANCIAL YEAR 2019 AND SUBSEQUENT YEARSThe IMF forecasts solid further growth for the global economy in 2019
and the ensuing years. Independently of that, and also in light of a slightly
improved market environment in the US, we expect that we will be able to
further expand our core business with primary packaging and drug delivery
systems for the pharma and healthcare industry in the financial year 2019.
As part of a strategic analysis in the financial year 2018, we once again
conducted an overall review of all markets in which we already have a
presence today, including glass and plastic pharmaceutical primary packaging,
cosmetic glass, syringes, and drug delivery devices such as inhalers and
insulin pens. In addition, we looked at other markets we could target with
our existing capabilities and, last but not least, adjacent markets that we
have not yet been able to develop today but that may nonetheless hold
potential. Examples include the market for connected drug delivery devices,
meaning smart drug delivery products with digital interfaces.
5) International Monetary Fund: World Economic Outlook Update, October 2018. 6) International Monetary Fund: World Economic Outlook, October 2018.
99GROUP MANAGEMENT REP ORT› Events after the Balance Sheet Date› Outlook
Gerresheimer operates in large and attractive markets
COSMETIC GLASS
ESTIMATED MARKET SIZE 2017 ²)
(in EUR bn) ~ 1.8 ~ 2.2 ~ 5.8 ~ 0.9 ~ 4.0
MARKET GROWTH CAGR ’17–’22 ²)
(in %)LOW SINGLE DIGIT MID SINGLE DIGIT
PHARMA GLASS1)
PHARMA PLASTIC
SYRINGES DRUG DELIVERY SYSTEMS
1) Tubular glass and molded glass.2) Strategically relevant markets, Gerresheimer estimates.
The table below provides an overview of the size of all potential markets
that we are capable of serving. This shows a total market potential of some
EUR 15bn.
Generally, the markets referred to here are markets of considerable size
and attractiveness, and in many areas we already have large market shares.
However, there are also areas where Gerresheimer has below-average or
even zero exposure and which therefore present us with attractive growth
opportunities. The market as a whole features segments with mid-single-
digit rates of growth, such as prefillable syringes, and segments with
low-single-digit growth rates, such as plastic pharmaceutical containers.
This latter segment is so large, however, that areas still exist where there are
opportunities for us to achieve above-average growth. The precise shape
of the related business models and the margins that can be expected are
matters that we appraise in detail market by market and project by project.
Around 2.2% annual volume growth is expected across all markets for the
next five years. The emerging markets will grow more rapidly than all other
markets, by about 3.7%. By contrast, IQVIA Institute projects zero growth
for developed economies and 1.8% for the rest of the world.
At the same time, the requirements placed on primary pharma packaging
are changing. Biotech-based drugs need special primary packaging that
meets high quality standards with regard to drug compatibility. Consumer
safety is also more and more a key factor, especially with self-medication
becoming increasingly widespread. Compatibility of glass and plastic systems
is important, notably for sophisticated products such as autoinjectors. Our
customers also attach importance to total cost of ownership, which takes
in manufacturing costs across the entire pharmaceutical process. These are
the trends and developments on which we base our strategic decisions
for additional investment and resource allocation today and in the future.
We have clearly identified Gerresheimer’s position in our customers’ value
chain, classifying the various sub-markets into markets we can already target
today and strategically relevant markets in the broader sense.
100 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Outlook
Gerresheimer positioning in the cosmetics value chain
PRO
VID
ERS
CO
NSU
MER
G
OO
DS
HA
RD
WA
RE
SER
VIC
E
PRIMARY PACKAGING &
FINISHING
Product & process development
LogisticsResearchDELIVERY
SYSTEMS & ASSEMBLY
ProductionSales &
marketingService
Filling machines
Plastic containers
Glass containers, samplers/finishing
Product analytics FillingFormulation
Components (pumps & closures)
Innovative design and development
Component pre-assembly & sealing
Strategically relevant market for Gerresheimer Market accessible for Gerresheimer
Gerresheimer positioning in the pharma value chain
PRO
VID
ERS
CO
NSU
MER
G
OO
DS
HA
RD
WA
RE
SER
VIC
E
PRIMARY PACKAGING
Product & process development
LogisticsResearchDELIVERY SYSTEMS &
ASSEMBLYProduction
Sales & marketing
Service
Filling machines
Blisters Primary packaging: glass and plastics, syringes, closures
Product analytics (e.g., sterilization)
FillingFormulation
Tooling, device assembly lines
Inhalation, injection
Device design & development
Assembly Logistics
Infusion; trans-dermal; implants; eye treatment; ear, nose & throat
Strategically relevant market for Gerresheimer Market accessible for Gerresheimer
101GROUP MANAGEMENT REP ORT› Outlook
Megatrends
RISE IN CHRONIC DISEASES AND
AGING POPULATION
STRICTER REGULATORY
REQUIREMENTS
Daily medicinal drug consumption growing
Need for “high-quality” solutions
Growing market
Demand for innovative solutions
More people with access to healthcare
Focus on quality and convenience
RAPID GROWTH
IN GENERICS
NEW DRUGS, ESPECIALLY IN BIOSIMILARS
AND BIOTECH
GROWING HEALTHCARE PROVISION IN
EMERGING MARKETS
GROWING TREND TOWARD
SELF-MEDICATION
MEGATRENDS
In forecasting our market and business opportunities, we primarily endeavor
to identify highly probable trends in our markets. Of particular importance in
this regard are long-term global trends—also referred to as megatrends. In
general, these are very stable trends not especially susceptible to setbacks. It
is crucial for us to pinpoint such trends in order to be able to make strategic
decisions for our Company. They relate to issues such as the development of
new growth markets as well as changes in the nature and scale of demand
for our products. In order to evaluate these issues, it is necessary to look into
which of the currently evident trends are based on short-term developments
and which are expected to be long-term and largely unaffected by political
or economic events. There are six main megatrends which we expect to
have a positive impact on our business development.
102 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Outlook
7) IDF: Diabetes Atlas, 8th Edition, 2017.8) IQVIA Institute, January 9, 2019.
1. RISE IN CHRONIC DISEASES AND AGING POPULATIONThe prevalence of chronic illnesses is growing. Some 425 million people suffer
from diabetes today. It is estimated that this figure could reach 630 million by
2040. Whereas approximately 9% of the world adult population suffer from
diabetes at present, this percentage is likely to rise beyond 10% by 2040
in parallel with further growth in the global population from 7.65 billion in
2018 to an expected 9.5 billion in 2040. Added to this, only every second
diabetes sufferer is so far diagnosed as such.7) The relative share of elderly
people in the population as a whole is also increasing in many parts of
the world—a trend that further abets the prevalence of chronic illnesses.
Increasing quantities of drugs are thus needed to treat growing numbers
of patients, and each individual pharmaceutical product requires a suitable
packaging and delivery solution. We therefore work together with customers
to develop insulin pens, skin-prick aids for diabetics and asthma inhalers that
are used every day in their millions—and rising. Pharmaceuticals companies
wish to attract patients with safe drug delivery products that are not only
user-friendly but have an appealing look and feel. Developing such products
in close harness with customers is one of our major strengths.
2. RAPID GROWTH IN GENERICS IQVIA projects average volume growth in generics of 2.9% a year for the
years 2019 to 2023.8) Generics revenues will show strong growth notably
in pharmerging markets, as medicines become affordable for many patients
once patent protection no longer applies. In traditional markets further
along the development cycle, too, drug licensing and control authorities
as well as health insurance funds place emphasis on good outcomes in
cost-benefit analysis, in many cases leading to generic drugs being approved
and increasingly also prescribed. This is a favorable trend for us, as the selling
price of a drug is a secondary concern from our perspective. What counts
most for us is volume growth, and so the growth of the generic drugs market
drives our revenues and hence net income.
3. GROWING HEALTHCARE PROVISION IN EMERGING MARKETS
For the pharmerging markets, IQVIA forecasts that medicine spending will
increase by an average of 3.7% a year over the next five years.8) The most
important markets include China, followed by India and Brazil. Even densely
populated China, however, attains only relatively small volumes in terms of
pharma revenues compared with the US. Given the population densities
in pharmerging markets, we see huge growth potential in the increasing
strength of their healthcare systems and improving access to healthcare
for the population, and we already have a strong presence with numerous
plants in China, India, Brazil and Mexico.
4. STRICTER REGULATORY REQUIREMENTSHealthcare authorities—especially those in the US—continue to impose ever
more exacting regulatory requirements. These have long since ceased to relate
solely to drug making and nowadays are equally relevant to pharmaceutical
packaging. Primary packaging must protect and preserve medication while
preventing loss of or variation in efficacy. This is why healthcare authorities
license new drugs only in conjunction with approval for the associated
primary packaging—which underscores the need for high-quality solutions.
Ultimately, the primary concern is patients’ health. We consequently invest
in quality worldwide and, in doing so, set ourselves apart from potential
competitors, as barriers to entry are raised higher as a result.
5. NEW DRUGS, ESPECIALLY IN BIOSIMILARS AND BIOTECH
New drugs tend as a rule to place fresh demands on packaging. In light of
intensive research and development by pharma companies, IQVIA experts
anticipate a record 45 new active substances to be launched on average per
year for the years 2016 to 2021. Demand for innovative solutions is growing,
with expected developments notably including innovative treatment methods
and new platforms. Here, we can offer innovative solutions based around
new materials such as high-performance COP (cyclic olefin polymer) plastic
or highly shatter-resistant glass (Gx® Elite Glass). One of our key competitive
advantages is our in-depth materials expertise combined with our very
extensive product range compared with competitors. This makes the specific
means of delivery used for a new drug irrelevant to us, as our exceptionally
broad product portfolio offers almost every conceivable glass and plastic
packaging solution for drugs in liquid, solid or powder form. Similarly, we
have an extensive range of packaging for pharmaceuticals produced in
traditional chemical processes, for biotech-based drugs and likewise for
generics, as well as for all types of over-the-counter pharmaceuticals.
6. GROWING TREND TOWARD SELF-MEDICATIONWhen patients have to self-medicate, they need simple, reliable solutions. We
offer a wealth of smart self-medication products for this purpose, with the
prime focus on quality and convenience. At the same time, these products
make medication easier to take, help avoid medication errors, and give
patients greater freedom and enhanced quality of life. They also help cut
costs in the healthcare system because many of them serve to reduce the
quantity and duration of outpatient or inpatient care that would otherwise
be needed.
103GROUP MANAGEMENT REP ORT› Outlook
EXPECTED RESULTS OF OPERATIONS
THE GROUP Our overarching Group objective is to become the leading global partner for
enabling solutions that improve health and well-being. To achieve this, we
aim to expand our global presence and generate profitable, sustained growth.
PLASTICS & DEVICESIn the Plastics & Devices Division, we expect only modest growth in 2019.
Our prescription drug delivery devices remain the main revenue driver in
this segment. These primarily comprise insulin pens and inhalers, but also
syringes. Regionally speaking, our business with prescription drug delivery
devices will retain its European focus. Overall, our business in this division
is firmly on track for growth thanks to clear, intact megatrends, and will
continue to grow in 2020, especially in terms of syringe sales. In the short
term, however, the growth trend will be slowed by the loss of a larger cus-
tomer for inhalers as well as by plant modifications and relocations, notably
in preparation for business based on the newly acquired Sensile Medical
micro pumps. This is also reflected in capital expenditure for expansion at our
locations—in Buende (Germany) for a large syringe order and in Horsovsky
Tyn (Czech Republic) due to a large inhaler order awarded in 2018—as well
as initial investment spending on a new production site in Eastern Europe.
Revenues from our plastic primary packaging products are expected to
continue performing well in the financial year 2019 in Europe, the US and
emerging markets. There, too, investment is planned in light of the strong
demand in China, Brazil and also India.
PRIMARY PACKAGING GLASSIn our Primary Packaging Glass Division, we anticipate slightly above market
revenue growth with our glass primary packaging, such as pharma jars,
ampoules, injection vials, cartridges, perfume flacons and cream jars. We will
once again be deploying various measures to further boost productivity in
2019. These mainly involve investment in standardizing our glass production
machinery and in adding to glass production capacity. We expect revenue
growth above all in our emerging market operations. We also anticipate
a positive operating environment for the cosmetics business, and likewise
expect to slightly increase revenues with glass cosmetic products in the
financial year 2019.
ADVANCED TECHNOLOGIESBy adhering to our four growth drivers—stronger growth with existing and
new customers, ongoing product development and innovation, regional
expansion, and additions to our service and value portfolio—we have now
succeeded in taking a further major step forward. We acquired Sensile
Medical while at the same time establishing our new Advanced Technologies
Division in 2018. With this strategic acquisition, we gain access to a highly
innovative technology, thereby enhancing our capability and product port-
folio. Sensile Medical’s leading position in micro pump technology combined
with drug delivery devices featuring electronic and connected capabilities
for medical applications progresses to market readiness in specific customer
projects with pharma companies. By contrast to the contract manufacturing
model in the medical plastic systems business, Sensile Medical is involved
at pharma producers in an earlier phase of drug and therapy development.
In an already well-advanced collaboration, for example, pharma company
Sanofi contributes its many years of experience with insulin and solutions
for the treatment of diabetes. Verily, a company in the Alphabet Group,
likewise contributes its expertise in integrating microtechnology and digital
health technology. Sensile Medical holds a large number of patents and is
remunerated by the pharma companies it partners with on attainment of
specified milestones in the development phase and by way of royalties after
product launch. It generates additional revenue from the sale of devices,
where the products can be manufactured either by external producers or by
Gerresheimer’s Medical Systems Business Unit. As a result, the new division
has little capital expenditure and low net working capital.
Sensile Medical, however, is just one building block in our long-term onward
development. More acquisitions and collaborations with universities and
other trading partners and customers will follow in order to further enhance
Gerresheimer’s positioning as the solutions provider for the pharma and
healthcare industry.
104 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Outlook
EXPECTED FINANCIAL SITUATION AND LIQUIDITY
The Gerresheimer Group had EUR 80.6m in cash and cash equivalents as of
November 30, 2018 (prior year: EUR 287.0m). We had EUR 185.6m available
as of the reporting date (prior year: EUR 450.0m) under the revolving credit
facility provided to Gerresheimer AG. This puts us in a sound financial
position, and we will continue to have sufficient liquidity in the financial
year ahead to finance our planned capital expenditure and meet our other
financial obligations.
The table below provides an overview of when the revolving credit facility
and promissory loans are due for refinancing.
Amount in EUR m Maturity
Revolving credit facility 450.0 June 2020
Promissory loans – November 2015
5 year tranche 189.5 November 2020
7 year tranche 210.0 November 2022
10 year tranche 25.5 November 2025
Promissory loans – September 2017
5 year tranche 95.5 September 2022
7 year tranche 109.0 September 2024
10 year tranche 45.5 September 2027
DIVIDEND POLICY
At the Annual General Meeting on June 6, 2019, the Management Board
and Supervisory Board of Gerresheimer AG will propose the distribution of
a dividend of EUR 1.15 per share for the financial year 2018. This represents
an increase of 4.5% on the prior-year dividend. The payout ratio amounts
to 20.3% of adjusted net income after non-controlling interests. This distri-
bution is in line with our dividend policy of distributing to our shareholders
between 20% and 30% of adjusted net income after non-controlling inter-
ests, depending on our operating performance. Following the acquisition
of Sensile Medical in the financial year 2018 and the resulting temporary
increase in debt to an adjusted EBITDA leverage ratio of more than 3.0x, we
consciously decided to keep the distribution at the lower end of this range.
In line with our operating performance, we plan to retain our dividend policy
in the financial year 2019 and distribute to our shareholders between 20%
and 30% of adjusted net income after non-controlling interests.
OVERALL OUTLOOK ASSESSMENT
Our Company is well equipped for the financial years ahead. We have
a sound financial base, long-range financing and a clear-cut corporate
strategy founded on long-term megatrends. We will continue to globalize
our Company, consolidate markets and take attractive technologies into
our portfolio. The goal in all activities is to further sharpen our focus on the
pharma/healthcare and cosmetics industries. Alongside organic growth that
we plan to finance out of operating cash flow, acquisitions subject to careful
appraisal of opportunities and risks will continue to play an instrumental role.
We are very well placed to systematically act on the potential opportunities
arising from a consolidation of our industry.
OVERALL GROUPThe Gerresheimer Group pursues a successful, clear-cut strategy geared to
sustained and profitable growth. Our expectations for the financial year 2019,
in each case assuming constant exchange rates and excluding acquisitions
and divestments, are set out in the following. In the table below, we list our
exchange rate assumptions for our key currencies as applied in all forecasts
provided. All forecasts are stated on a neutral basis in relation to these
currencies and excluding acquisitions and divestments.
1 EUR Currency
Argentina ARS 43.0000
Brazil BRL 4.3500
Switzerland CHF 1.1400
China CNY 7.9500
Czech Republic CZK 25.5000
India INR 85.0000
Mexico MXN 21.8500
Poland PLN 4.2500
United States of America USD 1.1500
The most important currency after the euro continues to be the US dollar
with a share of just under 30% of revenues and just below 40% of adjusted
EBITDA in 2019. As before, about a one cent rise or fall in the US dollar
against the euro has an impact of around EUR 4m on revenues and EUR 1m
on adjusted EBITDA.
105GROUP MANAGEMENT REP ORT› Outlook
Outlook for the financial year 2019:
Based on our current visibility, we expect consolidated revenues for the
financial year 2019 to be in a range of around EUR 1.4bn to EUR 1.45bn,
against a comparative figure of EUR 1,359.7m for the financial year 2018.9)
Attainment of the upper end of our forecast will also decisively depend on
the performance of our new Advanced Technologies Division. We expect
adjusted EBITDA to be approximately EUR 295m (plus or minus EUR 5m),
versus a comparative figure for adjusted EBITDA of EUR 289.1m10) in the
financial year 2018. Aside from low margins on development orders for the
new Advanced Technologies Division, this is notably due to the Plastics &
Devices Division, which is causing a temporary decrease in the Group adjusted
EBITDA margin due to higher revenues in the low-margin engineering and
tooling business, newly awarded large orders and increased expenditure for
relocation, employee training and production start-up/ramp-up. In addition, in
the financial year 2019, other operating income of approximately EUR 90m11)
arises from the derecognition of contingent consideration from the acquisition
of Sensile Medical. This results from a customer’s announcement after the
balance sheet date that he will not continue a project with Sensile Medical.
Gerresheimer hedged this risk economically by agreeing to a contingent
purchase price.
Preliminary indication for subsequent years in terms of
revenues and adjusted EBITDA:
In terms of base-level organic growth, we expect for the financial years
2019 and 2020 initially to grow with the market for products relevant to
us. This growth is to be increased by one percentage point by means of
further improvements in the product mix, to be achieved through a shift
toward more high-quality products such as syringes for biotech-based drugs,
new innovative developments like Gx® Elite Glass, and also glass cosmetics
packaging finishing. In addition, the new Advanced Technologies Division
and within it the Sensile Medical Business Unit will lead to a further increase
in revenues in 2020 to 2022. All in all, we assume that—based on revenues
for the financial year 2019—we will grow on average between 4% and 7%
p.a. on Group level until the end of 2022.
We secured a large inhaler order for Europe from a major international
pharma producer in 2018. The order was based on our good performance
in production—at our plant in Peachtree City (Georgia/USA)—of the same
inhaler sold by this customer on the North American market. Following tooling
revenues in 2019 and 2020, we expect to begin supplying the inhaler under
the European contract from the fourth quarter 2020. At full production—at
the earliest from the financial year 2023—we anticipate revenues from the
contract in a magnitude of up to EUR 30m a year. To fulfill the order, we are
going to invest in our Horsovsky Tyn plant in the Czech Republic during the
financial years 2019 and 2020.
Furthermore, we have succeeded for the first time in becoming the main
supplier to one of the largest heparin producers and are to supply this
customer with prefillable syringes under a multi-year contract. This is an
outcome of systematically pursuing our syringes strategy and the resulting
good performance together with our good cost position in the syringe
business. We expect initial revenues from this contract in the financial year
2019 and, at full production, that they will reach up to EUR 20m a year in
2021. To generate growth in medical devices and syringes generally, we plan
to build a new plant in Eastern Europe for manufacturing medical devices
and possibly also syringes. At the same time, we will continue to accelerate
automation across all plants.
9) Based on the EUR 1,367.7m revenues for the financial year 2018 less revenues of approximately
EUR 8m for the loss of the inhaler customer at our plant in Kuessnacht (Switzerland).10) Based on adjusted EBITDA for the financial year 2018 in the amount of EUR 298.6m, plus
EUR 1.1m for the expense relating to the fair value measurement of the Triveni put option,
plus EUR 1.4m for the expense relating to the exemption from electricity network charges,
less a total of EUR 12m for the adjusted EBITDA from the revenues and for the non-recurring
compensation payments relating to the loss of the inhaler customer at our plant in Kuessnacht,
(Switzerland).11) We are currently analyzing any impact on the recoverability of the acquired goodwill and
technology. Irrespective of the outcome of our analysis, this will not have any significant impact
on adjusted EBITDA.
106 Gerresheimer AG ANNUAL REP ORT 2018GROUP MANAGEMENT REP ORT› Outlook
As a result of the previously described higher revenues in the low-margin
engineering and tooling business, we expect the adjusted EBITDA margin
in the business year 2020 to be reduced by the newly awarded large orders
and increased expenditures for relocation, employee training and production
start-up/ramp-up of in the Plastics & Devices Division, so that the adjusted
EBITDA margin for the Group should be around 21%. The Gerresheimer
Group’s adjusted EBITDA margin should then increase by around 2 percentage
points in the financial years 2021 and 2022 compared to the financial years
2019 and 2020 to around 23% as a result of the measures described above
and the large projects.
The growth in the financial years 2021 and 2022 requires additional capital
expenditure for immediate capacity expansion which, on our indicative esti-
mates, will raise capital expenditure as a percentage of revenues at constant
exchange rates by up to 4 percentage points in the financial years 2019 and
2020. Group capital expenditure will thus be at approximately 12%. This
temporarily increased capital expenditure already includes all expenditure
required for the plant to be built in Eastern Europe and for automation across
all plants in the Group. From the financial year 2021, we then anticipate
that capital expenditure will return to its normal level of approximately 8%
of consolidated revenues at constant exchange rates.
As to net working capital, we target about 16% of revenues in all years.
Fluctuations in the order situation and customer requirements with regard
to safety stocks can influence this value.
Our long-term target for the entire Group remains as follows:
› Gx ROCE of approximately 15%.
› We continue to consider a net financial debt to adjusted EBITDA ratio of
2.5x to be right, with temporary variation above or below this permitted
because M&A activity cannot be planned in exact detail.
107GROUP MANAGEMENT REP ORT› Outlook
108 Gerresheimer AG ANNUAL REP ORT 2018
Consolidated Financial Statements
109
110 CONSOLIDATED INCOME STATEMENT
111 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
112 CONSOLIDATED BALANCE SHEET
113 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
114 CONSOLIDATED CASH FLOW STATEMENT
115 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
115 (1) General Information
118 (2) Consolidated Group
122 (3) Consolidation Principles
122 (4) Currency Translation
123 (5) Accounting Policies as well as Judgment and Estimates
128 (6) Financial Risk Management and
Derivative Financial Instruments
129 (7) Consolidated Cash Flow Statement
130 NOTES TO THE CONSOLIDATED INCOME STATEMENT
130 (8) Revenues
130 (9) Cost of Sales
130 (10) Selling and Administrative Expenses
130 (11) Other Operating Income
131 (12) Restructuring Expenses
131 (13) Other Operating Expenses
132 (14) Net Finance Expense
132 (15) Income Taxes
133 (16) Earnings per Share
133 OTHER INFORMATION ON THE
CONSOLIDATED INCOME STATEMENT
133 (17) Personnel Expenses
134 NOTES TO THE CONSOLIDATED BALANCE SHEET
134 (18) Intangible Assets
136 (19) Property, Plant and Equipment and Investment Property
137 (20) Investments Accounted for Using the Equity Method
138 (21) Financial Assets
139 (22) Other Receivables
139 (23) Deferred Taxes
140 (24) Inventories
141 (25) Trade Receivables
141 (26) Cash and Cash Equivalents
141 (27) Equity and Non-controlling Interests
142 (28) Provisions for Pensions and Similar Obligations
146 (29) Long-term Share-price-based Variable Remuneration
(phantom stocks)
148 (30) Other Provisions
149 (31) Financial Liabilities
151 (32) Other Liabilities
151 (33) Other Financial Obligations
152 (34) Reporting on Capital Management and Financial Instruments
155 OTHER NOTES
155 (35) Segment Reporting
158 (36) Auditor Fees
158 (37) Related Party Disclosures
158 (38) Total Remuneration of the Members of the
Supervisory Board and Management Board
159 (39) Corporate Governance
159 (40) Events after the Balance Sheet Date
110 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT
Financial Year 2018 (December 1, 2017 to November 30, 2018)
in EUR k Notes 2018 2017
Revenues (8) 1,367,730 1,348,255
Cost of sales (9) -967,599 -934,415
Gross profit 400,131 413,840
Selling and administrative expenses (10) -259,405 -255,569
Other operating income (11) 29,996 33,640
Restructuring expenses (12) -11,274 -2,558
Other operating expenses (13) -20,023 -8,650
Share of profit or loss of associated companies (20) 34 93
Results of operations 139,459 180,796
Interest income (14) 2,437 4,362
Interest expense (14) -29,746 -34,995
Other financial expenses (14) -4,953 -4,675
Net finance expense -32,262 -35,308
Net income before income taxes 107,197 145,488
Income taxes (15) 23,931 -42,436
Net income 131,128 103,052
Attributable to equity holders of the parent 128,965 100,887
Attributable to non-controlling interests 2,163 2,165
Diluted and non-diluted earnings per share (in EUR) (16) 4.11 3.21
Notes (1) to (40) are an integral part of these consolidated financial statements.
111CONSOL I DATED F INANCI AL S TATEMENT S› Consolidated Statement of Comprehensive Income
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Financial Year 2018 (December 1, 2017 to November 30, 2018)
in EUR k Notes 2018 2017
Net income 131,128 103,052
Results from the revaluation of defined benefit plans (28) 5,362 4,990
Income taxes -1,050 -1,458
Other comprehensive income that will not be reclassified subsequently to profit or loss 4,312 3,532
Changes in the fair value of available-for-sale financial assets -1 51
Income taxes – -15
Other comprehensive income from financial instruments -1 36
Currency translation 3,557 -45,449
Other comprehensive income from currency translation 3,557 -45,449
Other comprehensive income that will be reclassified to profit or loss when specific conditions are met 3,556 -45,413
Other comprehensive income 7,868 -41,881
Total comprehensive income 138,996 61,171
Attributable to equity holders of the parent 137,158 59,876
Attributable to non-controlling interests 1,838 1,295
Notes (1) to (40) are an integral part of these consolidated financial statements.
112 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET
As of November 30, 2018
ASSETS
in EUR k Notes Nov. 30, 2018 Nov. 30, 2017
Non-current assets
Intangible assets (18) 1,505,679 1,101,229
Property, plant and equipment (19) 620,728 602,577
Investment property (19) 4,611 5,732
Investments accounted for using the equity method (20) 297 252
Income tax receivables 1,692 1,394
Other financial assets (21) 3,683 5,077
Other receivables (22) 2,871 1,594
Deferred tax assets (23) 19,495 11,030
2,159,056 1,728,885
Current assets
Inventories (24) 171,490 148,362
Trade receivables (25) 273,531 242,684
Income tax receivables 5,462 2,522
Other financial assets (21) 18,025 17,020
Other receivables (22) 21,825 17,588
Cash and cash equivalents (26) 80,570 287,036
Non-current assets and disposal groups held for sale (19) 955 –
571,858 715,212
Total assets 2,730,914 2,444,097
EQUITY AND LIABILITIES
in EUR k Notes Nov. 30, 2018 Nov. 30, 2017
Equity
Subscribed capital (27) 31,400 31,400
Capital reserve (27) 513,827 513,827
IAS 39 reserve (6) -6 -5
Currency translation reserve (27) -67,139 -71,021
Retained earnings (27) 394,578 278,862
Equity attributable to equity holders of the parent 872,660 753,063
Non-controlling interests (27) 17,473 36,462
890,133 789,525
Non-current liabilities
Deferred tax liabilities (23) 167,862 143,539
Provisions for pensions and similar obligations (28) 141,583 145,104
Other provisions (30) 10,945 10,190
Trade payables (31) 120 –
Other financial liabilities (31) 751,417 681,304
Other liabilities (32) 503 1,092
1,072,430 981,229
Current liabilities
Provisions for pensions and similar obligations (28) 13,943 13,580
Other provisions (30) 44,951 35,214
Trade payables (31) 207,282 176,303
Other financial liabilities (31) 389,683 337,667
Income tax liabilities 4,873 9,387
Other liabilities (32) 107,619 101,192
768,351 673,343
1,840,781 1,654,572
Total equity and liabilities 2,730,914 2,444,097
Notes (1) to (40) are an integral part of these consolidated financial statements.
113CONSOL I DATED F INANCI AL S TATEMENT S› Consolidated Statement of Changes in Equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Financial Year 2018 (December 1, 2017 to November 30, 2018)
Other comprehensive income
in EUR k
Subscribed capital
Capital reserve
IAS 39 reserve
Currency translation
reserve Retained earnings
Equity attributable
to equity holders of the parent
Non- controlling
interests Total
equity
As of November 30/December 1, 2016 31,400 513,827 -41 -26,442 207,413 726,157 37,138 763,295
Net income – – – – 100,887 100,887 2,165 103,052
Other comprehensive income – – 36 -44,579 3,532 -41,011 -870 -41,881
Total comprehensive income – – 36 -44,579 104,419 59,876 1,295 61,171
Distribution – – – – -32,970 -32,970 -1,971 -34,941
As of November 30/December 1, 2017 31,400 513,827 -5 -71,021 278,862 753,063 36,462 789,525
Net income – – – – 128,965 128,965 2,163 131,128
Other comprehensive income – – -1 3,882 4,312 8,193 -325 7,868
Total comprehensive income – – -1 3,882 133,277 137,158 1,838 138,996
Acquisition of a subsidiary with non-controlling interests – – – – – – 357 357
Acquisition of non-controlling interests without change of control – – – – 16,979 16,979 -19,438 -2,459
Distribution – – – – -34,540 -34,540 -1,746 -36,286
As of November 30, 2018 31,400 513,827 -6 -67,139 394,578 872,660 17,473 890,133
Notes (1) to (40) are an integral part of these consolidated financial statements.
114 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Consolidated Cash Flow Statement
CONSOLIDATED CASH FLOW STATEMENT
Financial Year 2018 (December 1, 2017 to November 30, 2018)
in EUR k Notes 2018 2017
Net income 131,128 103,052
Income taxes (15) -23,931 42,436
Amortization of intangible assets (18) 44,797 35,952
Depreciation/impairment losses of property, plant and equipment (19) 92,264 88,899
Share of profit or loss of associated companies and other investment income (20) -200 -93
Change in other provisions 8,123 -15,965
Change in provisions for pensions and similar obligations -11,485 -8,892
Gain (-)/loss (+) on the disposal of non-current assets/liabilities 272 -1,435
Net finance expense (14) 32,262 35,308
Interests paid -29,929 -25,673
Interests received 983 1,682
Income taxes paid -40,620 -52,235
Income taxes received 3,652 2,551
Change in inventories -23,575 3,519
Change in trade receivables and other assets -27,488 -24,315
Change in trade payables and other liabilities 19,362 9,468
Other non-cash expenses/income -2,143 24,904
Cash flow from operating activities 173,472 219,163
Cash received from disposals of non-current assets 279 3,094
Cash paid for capital expenditure
in intangible assets -5,063 -19,655
in property, plant and equipment -109,501 -96,864
in financial assets -162 –
Cash received in connection with divestments, net of cash paid (7) – 1,356
Cash paid for the acquisition of subsidiaries, net of cash received (7) -172,489 –
Cash flow from investing activities -286,936 -112,069
Acquisition of non-controlling interests (7) -15,631 –
Distributions to third parties -36,317 -34,889
Distributions from third parties 166 168
Raising of loans 390,270 288,049
Repayment of loans -433,213 -192,196
Cash paid for finance lease -682 -597
Cash flow from financing activities -95,407 60,535
Changes in financial resources -208,871 167,629
Effect of exchange rate changes on financial resources -788 -3,776
Financial resources at the beginning of the period 271,595 107,742
Financial resources at the end of the period 61,936 271,595
Components of the financial resources
Cash and cash equivalents (26) 80,570 287,036
Bank overdrafts -18,634 -15,440
Financial resources at the end of the period 61,936 271,596
Notes (1) to (40) are an integral part of these consolidated financial statements.
115CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
of Gerresheimer AG for the Financial Year 2018(December 1, 2017 to November 30, 2018)
(1) General Information
The Gerresheimer Group is a leading international manufacturer of high-
quality specialty glass and plastic products for the global pharma and health-
care industry. Based on in-house development and the latest production
technologies, Gerresheimer offers pharmaceutical primary packaging, drug
delivery systems and diagnostic systems and packaging for the cosmetics
industry.
The consolidated financial statements as of November 30, 2018 were
prepared in accordance with the International Financial Reporting Stan-
dards (IFRSs), applicable as of the reporting date, issued by the International
Accounting Standards Board (IASB) as adopted by the European Union as
well as with regulations under commercial law as set fourth in section 315e
paragraph 1 of the German Commercial Code (Handelsgesetzbuch/HGB).
Gerresheimer AG has its registered office in Klaus-Bungert-Strasse 4,
40468 Duesseldorf (Germany). Gerresheimer AG is entered in the commercial
register at the Duesseldorf District Court (Amtsgericht—HRB 56040).
Gerresheimer AG shares are listed on the regulated market in the Prime
Standard segment of the Frankfurt Stock Exchange under the stock symbol
GXI and ISIN DE000A0LD6E6. Gerresheimer has been included in the MDAX
since December 22, 2008.
The accounting principles are consistent with the prior year, except for the
following revised standards, which were adopted for the first time.
› Amendments to IAS 7, Disclosure Initiative
› Amendments to IAS 12, Recognition of Deferred Tax Assets for
Unrealised Losses
› Annual Improvements to IFRSs, 2014 – 2016 Cycle: The amendments
to IFRS 12 are to be applied for the first time for financial years
beginning on or after January 1, 2017
First-time adoption of the above-mentioned standards have not had any
significant effect on the consolidated financial statements.
The IASB also published the following new or revised standards and
interpretations, which were adopted by the European Commission, were
not yet applicable in the financial year and were not applied earlier:
› IFRS 9, Financial Instruments, effective date January 1, 2018
› IFRS 15, Revenue from Contracts with Customers, effective date
January 1, 2018
› Clarifications to IFRS 15, Revenue from Contracts with Customers,
effective date January 1, 2018
› IFRS 16, Leases, effective date January 1, 2019
› Amendments to IFRS 2, Classification and Measurement of
Share-based Payment Transactions, effective date January 1, 2018
› Amendments to IFRS 4, Applying IFRS 9 Financial Instruments with
IFRS 4 Insurance Contracts, effective date January 1, 2018
› Amendments to IFRS 9, Prepayment Features with Negative
Compensation, effective date January 1, 2019
› Amendments to IAS 40, Transfers of Investment Property,
effective date January 1, 2018
› IFRIC 22, Foreign Currency Transactions and Advance Consideration,
effective date January 1, 2018
› IFRIC 23, Uncertainty over Income Tax Treatments,
effective date January 1, 2019
› Annual Improvements to IFRSs, 2014 – 2016 Cycle: The amendments
to IFRS 1 and IAS 28 are to be applied for the first time for financial
years beginning on or after January 1, 2018
The new standard IFRS 9 “Financial Instruments”, which replaces the previous
IAS 39 “Financial Instruments: Recognition and Measurement”, introduces
a new classification model and new measurement requirements as well as a
new impairment model for financial assets. Furthermore, the general hedge
accounting requirements have been revised. With regard to financial liabilities,
on the other hand, IFRS 9 largely retains the previous requirements unaltered.
IFRS 9 is effective for annual periods beginning on or after January 1, 2018.
Gerresheimer will apply the provisions for the first time for the financial year
2019. As permitted under the transitional provisions in IFRS 9, Gerresheimer
has opted not to restate prior-year figures.
For financial assets, IFRS 9 contains a new classification and measurement
approach that reflects the business model for managing the assets and the
characteristics of their contractual cash flows. Assessment of these conditions
results in three principal classification categories for financial assets: measured
at amortized cost, at fair value through profit or loss (FVTPL), and at fair
value through other comprehensive income (FVOCI). The standard eliminates
the previous IAS 39 categories: held-to-maturity, loans and receivables and
available-for-sale. Unconsolidated investments were previously measured at
cost. Under IFRS 9, they now have to be measured at fair value. The carrying
amount of such investments as of November 30, 2018 was EUR 400k. Due
to the minor significance of these investments, Gerresheimer expects that
the effects of the transition to IFRS 9 will be negligible.
The new impairment model in IFRS 9 replaces the “incurred loss” model in
IAS 39 with a forward looking “expected credit loss” (ECL) model. Under
IFRS 9, loss allowances are recognized either on the basis of the expected
credit loss within twelve months of the reporting date or over the lifetime of
the asset. Financial assets are measured over the lifetime of the asset if, as
of the reporting date, the credit risk on the underlying asset has significantly
increased since initial recognition. This requires considerable judgment about
how changes in economic factors affect ECLs. The new impairment model
will apply to financial assets measured at amortized cost or at fair value
through other comprehensive income (FVOCI), except for investments in
equity instruments, and to contract assets. There are exceptions for trade
receivables and for contract assets recognized under IFRS 15. If such items do
116 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
not have a material financing component, all expected losses must be taken
into account on initial recognition. Where they do have a material financing
component, the entity can elect to recognize full lifetime expected losses.
Gerresheimer holds debt instruments almost exclusively in the form of current
trade receivables. Transition to the expected credit loss model does not have
a material impact here, in part due to the use of credit insurance.
The revised hedge accounting requirements provide for the same three types
of hedge accounting as are available under IAS 39. The main changes relate
to a broader range of eligible hedged items and hedges, as well as new
requirements with regard to hedge effectiveness, and notably the removal of
the 80% to 125% effectiveness limit under IAS 39. Gerresheimer expects that
all existing hedging relationships will continue to qualify for hedge accounting
under IFRS 9.
Analysis of the impact of IFRS 9 on the presentation of the net assets, finan-
cial position and results of operations is largely complete; based on current
knowledge, the effects of first-time adoption on the allocation of financial
instruments to measurement categories and thus on earnings are estimated
to be immaterial. IFRS 9 requires retrospective application with regard to
classification and measurement, while the revised hedge accounting require-
ments must normally be applied prospectively. Gerresheimer has opted not to
restate prior-year information with regard to the changes in classification and
measurement. Transition effects from application of IFRS 9 as of December 1,
2018 are recognized cumulatively in other comprehensive income and the
comparative period is presented in accordance with the previous rules.
The new standard IFRS 15 “Revenue from Contracts with Customers” com-
bines the previous revenue recognition requirements and brings them under
a uniform revenue recognition model. It notably replaces IAS 18 “Revenue”,
IAS 11 “Construction Contracts” and various revenue-related interpretations.
IFRS 15 lays down uniform principles applicable to contracts with customers
across all industries. The main exceptions include leases, financial instruments
and insurance contracts. IFRS 15 introduces a five-step model that determines
the amount of revenue recognized and whether revenue is recognized at
a point in time or over time. Under IFRS 15, amounts are to be recognized
as revenue that the entity expects in consideration for transferring goods
or services to a customer. Revenue is recognized when the entity transfers
control of goods or services either over time or at a point in time. The standard
also includes numerous other detailed requirements and additions to notes
disclosures. Initial application is generally required to be retrospective, but
various practical expedients are provided as an alternative. Gerresheimer
has analyzed the business models of all divisions against the new standard
in an implementation project. As an outcome of the case-by-case review of
significant contracts, Gerresheimer has implemented guidelines to ensure
standardized processes.
No material transition effects are expected with regard to revenue from the
sale of products. Most such revenues are currently, and will continue to be,
recognized on the basis of international commercial terms (Incoterms). These
specify the point in time at which control of goods and the related risks and
rewards of ownership transfer to the customer. Revenue is recognized at
this point provided that the revenue and costs can be measured reliably, the
recovery of the consideration is probable, no control of the goods remains and
it is not probable that recognized revenue will have to be canceled.
In consignment arrangements, where products and merchandise remain
the property of the Gerresheimer Group until withdrawn by the customer,
revenue is currently recognized when the customer withdraws the products
and merchandise. Under some such arrangements, however, customers obtain
control upon delivery of the products and merchandise to the consignment
store. There are also agreements with various customers on molds used in
the production process, where the customer obtains control on acceptance of
each mold. Both of these situations result in revenue being recognized earlier
than under the previous rules. The application of IFRS 15 to consignment
arrangements and molds, taking into account taxes on profits, will result
in an increase in retained earnings by about EUR 0.6m. The impacts of this
change on other items in the consolidated financial statements consist of a
rise in trade receivables (contract assets) by about EUR 1.5m and a decrease
in inventories by about EUR 0.7m.
A further portion of Gerresheimer Group revenues relates to customer-specific
construction contracts, which are currently accounted for using the percentage
of completion method. In the course of implementing the new requirements
under IFRS 15, these contracts were specifically reviewed to determine whether
they can continue to be accounted for on a progress basis and therefore meet
the new criteria for recognition over time. Contract analysis has shown that
transfer of control over time can be verified for construction contracts in the
Gerresheimer Group. Due both to the highly customer-specific assets for which
Gerresheimer has no alternative use and to the contractual arrangements
under which Gerresheimer is legally entitled to consideration for completed
performance including a margin, there was no identifiable need to change
over to revenue recognition at a point in time.
117CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
In addition, changes may arise in the accounting for costs of obtaining
contracts. Sales commission cost is thus now no longer taken into account
on determining a contract’s stage of completion, but is recognized as an
asset on inception of contract and in profit or loss in accordance with the
transfer of goods and services to the customer. Furthermore, effects are to
be expected as a result of presentation changes on the consolidated balance
sheet—such as due to the recognition of contract assets and liabilities—and
of the additional qualitative and quantitative notes disclosures.
Management does not expect that the application of IFRS 15 will have any
material impact on the presentation of the Group’s net assets, financial position
and results of operations.
IFRS 15 applies for annual periods beginning on or after January 1, 2018,
meaning that Gerresheimer will apply the standard from December 1, 2018;
that is, from the beginning of the financial year 2019. Gerresheimer has opted
for modified retrospective first-time application of the requirements under
IFRS 15, which means that the reporting period is presented in accordance with
IFRS 15, while the comparative prior-year period is presented in accordance
with IAS 11/IAS 18. The cumulative effects of first-time application of the new
standard on contracts not yet fully completed as of December 1, 2018 are
recognized in retained earnings or other equity items as of December 1, 2018.
The new standard IFRS 16 “Leases” replaces the previous standard IAS 17 and
various interpretations. It introduces a uniform model for identifying leasing
arrangements and for accounting by lessees. In the future, lessees are no
longer required to distinguish between operating leases and finance leases.
Instead, for all leases, lessees will recognize a right-of-use asset—representing
the right to use the leased asset—and a corresponding lease liability. Exceptions
are made solely for short-term leases with a term of no more than twelve
months and leases for assets of low value. In addition, the nature of expenses
related to those leases will now change as IFRS 16 replaces the operating
lease expense with a depreciation charge for right-of-use assets and interest
expense on lease liabilities.
Most leases entered into by Gerresheimer Group companies as lessees in
the past have been operating leases. Gerresheimer continued to assess the
potential impacts of the new requirements on the consolidated financial
statements in a project on the implementation of IFRS 16 during the financial
year under review. Recognizing new assets and liabilities for its operating leases
will have a material effect on the Gerresheimer Group. This will comprise
an increase in the balance sheet total, which will lead to a corresponding
reduction in the equity ratio. There will also be a reduction in the minimum
operating lease payments previously disclosed under other financial obligations.
In addition, with regard to the consolidated income statement, the operating
lease expense will be replaced with a depreciation charge for right-of-use
assets and interest expense on lease liabilities. This will increase the results
of operations. In the cash flow statement, the application of IFRS 16 will
tend to lead to an improvement in cash flow from operating activities, as the
principal portion of the lease payments is to be classified within cash flow from
financing activities. The quantitative effects of IFRS 16 depend on the choice
of transition method, the extent to which Gerresheimer applies the practical
expedients and the exceptions to the recognition principles, and additional
leases entered into prior to first-time application. With rental and operating
lease obligations of EUR 37.9m and a balance sheet total of EUR 2,730.9m
as of November 30, 2018, the balance sheet total would increase by 1.4% if
none of the practical expedients and exceptions were to be applied.
For finance lease contracts where Gerresheimer is the lessee, assets and
liabilities are already recognized. In these cases, the application of IFRS 16
will not have any material effect on the consolidated financial statements.
IFRS 16 applies for annual periods beginning on or after January 1, 2019,
meaning that Gerresheimer will apply the standard from December 1, 2019;
that is, from the beginning of the financial year 2020. Gerresheimer has not
yet decided whether it will use potential exemptions. Gerresheimer has opted
for modified retrospective first-time application of the requirements under
IFRS 16, which means that the reporting period is presented in accordance with
IFRS 16, while the comparative prior-year period is presented in accordance
with IAS 17. The analysis of the impact of IFRS 16 on the presentation of the
net assets, financial position and results of operations is not yet complete,
so that from today’s perspective it is not practicable to provide a reasonable
estimate of the financial effect. For information on the finance leases as well
as rentals and operating leases, please see Note (33).
For the sake of clarity and information value of the consolidated financial
statements, certain items are combined in the consolidated balance sheet and
the consolidated income statement and presented separately in the notes to
the consolidated financial statements. The consolidated income statement
has been prepared using the function of expense method.
The consolidated financial statements are presented in euros, the functional
currency of the parent company. Individual values as well as subtotal values
reflect the value with the smallest rounding difference. Consequently, minor
differences to subtotal values can occur when adding up reported individual
values.
The consolidated financial statements of Gerresheimer AG are published in Ger-
man in the Federal Law Gazette and on the Internet at www.gerresheimer.com.
118 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
(2) Consolidated Group
a) Changes in the consolidated Group and in non-controlling
interests during the financial year 2018
i) Exercise of call option Triveni Polymers Private Ltd.
On April 9, 2018, Gerresheimer has exercised the call option, which existed
since the acquisition of Triveni Polymers Private Ltd. (New Delhi/India) on
December 20, 2012, on the 25% stake held by third parties in this company.
In the course of the acquisition in 2012 a put option was also agreed upon
with the sellers, allowing them to tender their aforementioned stake to
Gerresheimer. Due to the exercise of the call option by Gerresheimer the
put option has now expired. In this respect, we have derecognized the
previously recognized liability for the put option. As a result of exercising the
call option, Gerresheimer has gained ownership of the returns associated
to the acquired shares already as of April 1, 2018. The transaction has no
further impact on assets, liabilities and equity, as these have already been
recognized in full in the consolidated balance sheet. Payment of the purchase
price for the remaining shares has taken place in the fourth quarter 2018.
ii) Acquisition of Sensile Medical AG
On July 11, 2018, Gerresheimer signed an agreement for the purchase
of approximately 99.89% of capital shares and voting rights in Sensile
Medical AG (Olten/Switzerland) (hereinafter Sensile Medical). With the
transaction already effective as of June 30, 2018, the company is included
in the consolidated financial statements of Gerresheimer AG.
Sensile Medical’s leading position in micro pump technology combined
with drug delivery devices featuring electronic and connected capabilities
for medical applications progresses to market readiness in specific customer
projects with pharma companies. By means of this acquisition, Gerresheimer
expands its business model towards Original Equipment Manufacturer (OEM)
for drug delivery hubs with digital and electronic facilities for pharmaceutical
and biopharmaceutical companies. By contrast to the contractual manufac-
turing model in the Medical Systems Business Unit, Sensile Medical is involved
at pharma producers in an earlier phase of drug and therapy development.
In an already well-advanced collaboration, for example, pharma company
Sanofi contributes its many years of experience with insulin and solutions
for the treatment of diabetes. A further party to the same joint project is
Verily, a subsidiary of the Alphabet Group, with its expertise in integrating
microtechnology and digital health technology. Sensile Medical holds a large
number of patents and is remunerated by the pharma companies it partners
with on attainment of specified milestones in the development phase and
by way of royalties after product launch. It generates additional revenue
from the sale of devices, where the products can be manufactured either
by external producers or by our Medical Systems Business Unit. As a result,
the new division has little capital expenditure and low net working capital.
The discounted consideration for the acquisition of the company after
net working capital and net debt adjustments in the fourth quarter 2018
amounts to a total of EUR 334,550k and is split as follows:
in EUR k
Cash 160,601
Fixed purchase price component 24,769
Contingent purchase price components 148,229
Other assumed liabilities 951
Purchase price 334,550
Due to its contractual agreement, Gerresheimer is obliged to pay further
variable purchase price components which are depending on the achievement
of specified contractually agreed milestones up to an undiscounted amount
of EUR 149,840k to the former shareholders of Sensile Medical. The total
amount becomes due for payment with an amount of EUR 56,190k on
June 1, 2019, the amount of EUR 18,730k on July 1, 2019, the amount
of EUR 37,460k on January 31, 2020 as well as EUR 37,460k not before
December 1, 2020. Consequently, an amount of EUR 148,229k was
recognized as contingent consideration, which corresponds to the fair value
as of the acquisition date; non-current contingent purchase price components
have been discounted according to the payment scheme. As of November 30,
2018 the fair value of the discounted contingent purchase price components
amounts to EUR 148,531k. Based on our current knowledge we expect the
full achievement of all contractually agreed milestones.
The first purchase price component was paid on July 17, 2018 in the amount
of EUR 160,601k. Moreover, Gerresheimer repaid bank loans of Sensile
Medical to a bank and certain shareholders in the amount of EUR 12,692k;
these bank loans were replaced by loans of a Group company. The fixed
purchase price after net working capital and net debt adjustments in the
amount of EUR 24,769k was paid on December 17, 2018.
Acquisition-related costs amounted to EUR 1,628k as of November 30,
2018 and are recognized in the consolidated income statement within other
operating expenses.
119CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
The acquisition was accounted for using the acquisition method on the
basis of the fair values of the identified assets and liabilities. Existing non-
controlling interests were recognized at fair value of the shares in Sensile
Medical (full goodwill method). The acquisition of Sensile Medical affected
the consolidated balance sheet of Gerresheimer AG at the acquisition date
on June 30, 2018 as follows:
ASSETS
in EUR kJune 30,
2018
Non-current assets
Intangible Assets 425,320
Thereof: Goodwill 5,0141)
Thereof: Technologies 394,910
Thereof: Brand names 3,521
Thereof: Development costs 21,875
Property, plant and equipment 689
Other receivables 19
Deferred tax assets 7,539
433,567
Current assets
Trade receivables 9,465
Other receivables 249
Cash and cash equivalents 804
10,518
Total 444,085
EQUITY AND LIABILITIES
in EUR kJune 30,
2018
Non-controlling interests 357
Non-current liabilities
Deferred tax liabilities 75,944
Provisions for pensions and similar obligations 9,520
85,464
Current liabilities
Other provisions 733
Trade payables 2,083
Other financial liabilities 11,798
Income tax liabilities 65
Other liabilities 9,035
23,714
109,535
Purchase price 334,550
Total 444,085
1) Goodwill was adjusted in the fourth quarter 2018 due to the existing contractual agreement on net working capital and net debt adjustments.
EUR 5,014k in goodwill was recognized on the acquisition; this primarily
relates to expected earnings potential from the acquisition and the associated
expansion of the product portfolio and the company’s existing workforce.
Due to the acquisition by way of a share deal, there is no tax deductible
goodwill. In the course of the purchase price allocation fair value adjustments
of EUR 398,431k in intangible assets were recognized. These split into brand
names amounting to EUR 3,521k with a useful life of ten years as well as
technologies amounting to EUR 394,910k with a useful life of 16 years.
The resulting amortization of fair value adjustments are not included in the
calculation of adjusted earnings per share. In addition, provisions for pensions
and similar obligations in the amount of EUR 9,520k were recognized.
Furthermore, deferred tax assets of EUR 7,539k on tax loss carryforwards
and on temporary differences in pension provisions as well as deferred tax
liabilities in the amount of EUR 75,944k were recognized as a result of the
remeasurement. The nominal value of the acquired receivables corresponds
to their fair value at the acquisition date, and they are considered to be
fully recoverable. In all other respects, the received assets and liabilities were
accounted for at their carrying amounts on acquisition.
In its first five months in the Group, Sensile Medical generated revenues of
EUR 12,860k, adjusted EBITDA of EUR 2,955k and net income after income
taxes of EUR -7,084k. Amortization of fair value adjustments for the period
of inclusion into the Group amounts to EUR 10,431k and contrary income
from deferred taxes amounting to EUR 2,220k.
If Sensile Medical had been included in the consolidated financial statements
from the beginning of the financial year 2018, it would have contributed in
a pro forma calculation EUR 27,944k to Group revenues, EUR 2,779k to ad-
justed EBITDA and EUR -20,348k to net income. The net income would have
been mainly influenced by amortization of fair value adjustments amounting
to EUR 25,034k and contrary income from deferred taxes amounting to
EUR 5,327k. The values prior to inclusion into the Group relate to the values
according to local generally accepted accounting principles, taking into
account the significant matters arising from the purchase price allocation.
iii) Foundation of Gerresheimer Plastic Packaging (Changzhou) Co., Ltd.
With effective date September 10, 2018, Gerresheimer Plastic Packaging
(Changzhou) Co., Ltd. (Changzhou City/China) was newly established. This
company had no significant impact on the net assets, financial position and
results of operations or cash flows of the Gerresheimer Group.
120 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
b) Changes in the consolidated Group during the
financial year 2017
With effective date June 14, 2017, Gerresheimer Singapore Pte. Ltd.,
Singapore (Singapore) was newly established. This distribution company
had no significant impact on the net assets, financial position and results
of operations or cash flows of the Gerresheimer Group.
The full list of shareholdings of Gerresheimer AG as of November 30, 2018
is set out below:
in %
Investment (direct and
indirect)
Entities included in the consolidated financial statements
Asia
Gerresheimer Medical Plastic Systems Dongguan Co. Ltd., Wang Niu Dun Town, Dongguan City (China) 100.00
Gerresheimer Pharmaceutical Packaging Mumbai Private Ltd., Mumbai (India) 100.00
Gerresheimer Plastic Packaging (Changzhou) Co., Ltd., Changzhou City, Jiangsu (China) 100.00
Gerresheimer Singapore Pte. Ltd., Singapore (Singapore) 100.00
Gerresheimer Shuangfeng Pharmaceutical Glass (Danyang) Co. Ltd., Danyang, Jiangsu (China) 60.00
Gerresheimer Shuangfeng Pharmaceutical Packaging (Zhenjiang) Co. Ltd., Zhenjiang, Jiangsu (China) 60.00
Neutral Glass & Allied Industries Private Ltd., Mumbai (India) 100.00
Triveni Polymers Private Ltd., New Delhi (India) 100.00
Europe
DSTR S.L.U., Epila (Spain) 100.00
Gerresheimer Boleslawiec S.A., Boleslawiec (Poland) 100.00
Gerresheimer Bünde GmbH, Buende (Germany)1) 100.00
Gerresheimer Chalon SAS, Chalon-sur-Saone (France) 100.00
Gerresheimer Denmark A/S, Vaerloese (Denmark) 100.00
Gerresheimer Essen GmbH, Essen (Germany)1) 100.00
GERRESHEIMER GLAS GmbH, Duesseldorf (Germany)1) 100.00
Gerresheimer Group GmbH, Duesseldorf (Germany)1) 100.00
Gerresheimer Hallenverwaltungs GmbH, Duesseldorf (Germany)1) 100.00
Gerresheimer Hallenverwaltungs GmbH & Co. Objekt Düsseldorf KG, Duesseldorf (Germany) 2) 100.00
Gerresheimer Holdings GmbH, Duesseldorf (Germany)1) 100.00
Gerresheimer Horsovsky Tyn spol. s r.o., Horsovsky Tyn (Czech Republic) 100.00
Gerresheimer item GmbH, Muenster (Germany)1) 100.00
Gerresheimer Küssnacht AG, Kuessnacht (Switzerland) 100.00
Gerresheimer Lohr GmbH, Lohr/Main (Germany)1) 100.00
Gerresheimer Medical Plastic Systems GmbH, Regensburg (Germany)1) 100.00
Gerresheimer Momignies S.A., Momignies (Belgium) 100.00
Gerresheimer Moulded Glass GmbH, Tettau (Germany)1) 100.00
Gerresheimer Plastic Packaging SAS, Besancon (France) 100.00
Gerresheimer Regensburg GmbH, Regensburg (Germany)1) 100.00
Gerresheimer Spain S.L.U., Epila (Spain) 100.00
Gerresheimer Tettau GmbH, Tettau (Germany)1) 100.00
Gerresheimer Vaerloese A/S, Vaerloese (Denmark) 100.00
in %
Investment (direct and
indirect)
Gerresheimer Valencia S.L.U. in LIQ, Masalaves (Spain) 99.91
Gerresheimer Werkzeugbau Wackersdorf GmbH, Wackersdorf (Germany)1) 100.00
Gerresheimer Wertheim GmbH, Wertheim (Germany)1) 100.00
Gerresheimer Zaragoza S.A., Epila (Spain) 99.91
Sensile Medical AG, Olten (Switzerland) 99.89
Americas
Centor Inc., Perrysburg, OH (USA) 100.00
Centor Pharma Inc., Perrysburg, OH (USA) 100.00
Centor US Holding Inc., Perrysburg, OH (USA) 100.00
Gerresheimer Buenos Aires S.A., Buenos Aires (Argentina) 99.91
Gerresheimer Glass Inc., Vineland, NJ (USA) 100.00
Gerresheimer Mexico Holding LLC, Wilmington, DE (USA) 100.00
Gerresheimer MH Inc., Wilmington, DE (USA) 100.00
Gerresheimer Peachtree City (USA) L.P., Peachtree City, GA (USA) 100.00
Gerresheimer Peachtree City Inc., Peachtree City, GA (USA) 100.00
Gerresheimer Plasticos Sao Paulo Ltda., Embu (Brazil) 100.00
Gerresheimer Queretaro S.A., Queretaro (Mexico) 100.00
Gerresheimer Sistemas Plasticos Medicinais Sao Paulo Ltda., Indaiatuba (Brazil) 100.00
Kimble Chase Holding LLC, Vineland, NJ (USA) 51.00
Associated companies
Gerresheimer Tooling LLC, Peachtree City, GA (USA) 30.00
PROFORM CNC Nastrojarna spol. s r.o., Horsovsky Tyn (Czech Republic) 40.59
Non-consolidated companies3)
Nouvelles Verreries de Momignies Inc., Larchmont, NY (USA) 100.00
Corning Pharmaceutical Packaging LLC, Wilmington, DE (USA) 25.00 1) The Company made use of the exemption offered by section 264 para. 3 of the
German Commercial Code.2) The Company made use of the exemption offered by section 264b of the German
Commercial Code.3) Company not consolidated since it is not material to the net assets, financial position
and results of operations or the cash flows of the Group.
121CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
The Gerresheimer Group comprises the following subsidiaries with material
non-controlling interests:
November 30, 2018 November 30, 2017
in EUR k
Proportion of ownership interests and voting rights held by non-
controlling interests
in %
Accumulated non-
controlling interests
Distributions to non-
controlling interests1)
Proportion of ownership interests and voting rights held by non-
controlling interests
in %
Accumulated non-
controlling interests
Distributions to non-
controllinginterests1)
Subsidiary
Kimble Chase Holding LLC, Vineland, NJ (USA) 49.0 3,495 – 49.0 3,364 –
Gerresheimer Shuangfeng Pharmaceutical Glass (Danyang) Co. Ltd., Danyang, Jiangsu (China) 40.0 8,966 381 40.0 8,595 548
Gerresheimer Shuangfeng Pharmaceutical Packaging (Zhenjiang) Co. Ltd., Zhenjiang, Jiangsu (China) 40.0 4,659 1,336 40.0 4,857 1,371
Triveni Polymers Private Ltd., New Delhi (India) – – – 25.0 19,642 –
1) Distributions are converted at the respective transaction rate.
The following tables provide financial information for subsidiaries with material
non-controlling interests:
November 30, 2018
in EUR kNon-current
assetsCurrent
assetsNon-current
liabilitiesCurrent
liabilities Revenues Net income
Subsidiary
Kimble Chase Holding LLC, Vineland, NJ (USA) – 7,159 – 26 – -29
Gerresheimer Shuangfeng Pharmaceutical Glass (Danyang) Co. Ltd., Danyang, Jiangsu (China) 13,385 13,829 – 4,968 25,599 2,045
Gerresheimer Shuangfeng Pharmaceutical Packaging (Zhenjiang) Co. Ltd., Zhenjiang, Jiangsu (China) 5,161 9,492 – 2,737 16,514 2,981
November 30, 2017
in EUR kNon-current
assetsCurrent
assetsNon-current
liabilitiesCurrent
liabilities Revenues Net income
Subsidiary
Kimble Chase Holding LLC, Vineland, NJ (USA) – 6,918 – 51 – -216
Gerresheimer Shuangfeng Pharmaceutical Glass (Danyang) Co. Ltd., Danyang, Jiangsu (China) 12,646 14,568 – 5,897 23,411 1,364
Gerresheimer Shuangfeng Pharmaceutical Packaging (Zhenjiang) Co. Ltd., Zhenjiang, Jiangsu (China) 4,674 12,238 – 4,499 18,290 3,911
Triveni Polymers Private Ltd., New Delhi (India) 37,310 15,318 10,417 3,297 21,986 644
2018 2017
in EUR k
Cash flow from
operating activities
Cash flow from
investing activities
Cash flow from
financing activities
Cash flow from
operating activities
Cash flow from
investing activities
Cash flow from
financing activities
Subsidiary
Kimble Chase Holding LLC, Vineland, NJ (USA) -57 – – -338 1,356 –
Gerresheimer Shuangfeng Pharmaceutical Glass (Danyang) Co. Ltd., Danyang, Jiangsu (China) 1,560 -2,496 -965 3,805 -1,943 -1,414
Gerresheimer Shuangfeng Pharmaceutical Packaging (Zhenjiang) Co. Ltd., Zhenjiang, Jiangsu (China) -398 -1,101 -3,402 5,977 -2,023 -3,514
Triveni Polymers Private Ltd., New Delhi (India) – – – 3,189 -1,141 -24
Changes in non-controlling interests are shown in the consolidated statement
of changes in equity.
122 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
(3) Consolidation Principles
The consolidated financial statements include Gerresheimer AG and the
domestic and foreign subsidiaries it directly or indirectly controls.
Consolidation of subsidiaries begins at the date the parent company
obtains control. Subsidiaries are deconsolidated at the date control is lost.
Non-controlling interests in equity, profit or loss and comprehensive income
are presented separately in the consolidated balance sheet, consolidated
income statement and consolidated statement of comprehensive income.
In the consolidated balance sheet, non-controlling interests are presented
separately from equity attributable to equity holders of the parent.
Acquisitions of subsidiaries are accounted for using the acquisition method.
This stipulates that all identifiable assets and liabilities of an entity acquired
in a business combination are measured at acquisition date fair values.
Any excess of the sum of the consideration transferred, the fair value of
any previously held equity interest in the acquiree and any non-controlling
interest over the remeasured net assets of the subsidiary is recognized as
goodwill. Any gain from a bargain purchase (negative goodwill), after careful
reassessment, is recognized immediately under other operating income in
profit or loss.
Investments in associated companies are accounted for using the equity
method. Under the equity method, on initial recognition the investment in
an associated company is recognized at cost. On the following reporting
dates, taking into account any consolidation-specific effects, the carrying
amount is increased or decreased by the change in the proportionate equity
of the associated company. The two associated companies included in the
consolidated financial statements prepare their financial statements as
of December 31, and therefore at a different balance sheet date as the
consolidated financial statements. The at equity measurement is based on
the last available balance sheet of the associated company. For reasons of
practicability and materiality, the preparation of interim financial statements
at the consolidated reporting date is waived.
Domestic and foreign entities included in the consolidated financial state-
ments are prepared using uniform accounting policies.
Intra-Group transactions are eliminated. Receivables and payables between
consolidated entities are set off against each other, intra-Group profits and
losses are eliminated and intra-Group income is set off against correspon-
ding expenses. Temporary differences from consolidation are subject to tax
deferrals.
(4) Currency Translation
The Group companies prepare their annual financial statements based
on their respective functional currencies. All financial statements with
a functional currency other than the reporting currency are translated
into the reporting currency of the consolidated financial statements of
Gerresheimer AG. Non-monetary items are translated into the functional
currency at the transaction date exchange rate. Monetary items are translated
using the closing rate at the reporting date. Exchange gains or losses from
the translation of monetary assets and liabilities denominated in foreign
currency are recognized in the consolidated income statement except the
effective portion of any exchange rate gains or losses on financial instruments
designated as a cash flow hedge, which is recognized in other comprehensive
income.
The consolidated financial statements are presented in the reporting currency
euro. Balance sheet items of all foreign entities whose functional currency
is not the euro are translated using the mid-market rates at the reporting
date published by the European Central Bank.
Income and expense items as well as cash flows of foreign entities are
translated into the reporting currency using the yearly average exchange
rate. Any resulting differences from currency translation are recognized
in other comprehensive income and reported in the currency translation
reserve in equity with the exception of exchange differences allocated to
non-controlling interests. The total amount of cumulative exchange rate
differences allocated to the equity holders of the parent of a disposed foreign
operation is reclassified into the consolidated income statement.
The following exchange rates are used to translate the major currencies
into reporting currency:
Closing rate Average rate
1 EUR Currency
Nov. 30, 2018
Nov. 30, 2017 2018 2017
Argentina ARS 42.9161 20.6670 31.6806 18.5051
Brazil BRL 4.3843 3.8668 4.2536 3.5972
Switzerland CHF 1.1340 1.1699 1.1562 1.1060
China CNY 7.8897 7.8377 7.8097 7.5925
Czech Republic CZK 25.9570 25.4910 25.6524 26.4608
Denmark DKK 7.4622 7.4417 7.4507 7.4383
India INR 79.0815 76.3875 80.0276 73.3309
Mexico MXN 23.0910 22.0035 22.6645 21.3084
Poland PLN 4.2900 4.1955 4.2538 4.2764
Singapore SGD 1.5581 1.5986 1.5937 1.5518
United States of America USD 1.1359 1.1849 1.1834 1.1200
123CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
(5) Accounting Policies as well as Judgment and Estimates
Assets and liabilities are measured at amortized cost with the exception of
available-for-sale financial assets and derivative financial instruments, which
are measured at fair value.
Intangible assets
Intangible assets are carried at cost. Intangible assets with finite useful lives
are carried at cost less amortization allocated over their useful lives and
less any impairment losses. The useful life of licenses and similar rights is
one to 20 years. Brand names with finite useful lives are, like technologies,
amortized over their estimated useful lives of five to 20 years. Customer
bases are amortized over 15 to 20 years.
Other brand names and goodwill are recognized as intangible assets with
indefinite useful lives. Goodwill, arising from business combinations, is
capitalized at cost less any necessary impairment losses. Brand names with
indefinite useful lives and goodwill are tested for impairment at least once
a year. Impairment testing is performed at the end of a financial year and
additionally when there are indications of a possible impairment of intangible
assets with indefinite useful lives.
Research cost is expensed as incurred. Development cost is only recognized
as an intangible asset if—among other things—it is likely that the project
will be technically and commercially feasible and if the cost attributable
to the intangible asset during its development can be measured reliably.
Capitalized development costs are amortized on a straight-line basis over
three respectively ten years.
The Group receives emission allowances free of charge in certain European
countries as part of the European Emissions Trading System. These emission
allowances are accounted for using the net liability method. Gerresheimer
records the emission allowances as non-monetary government grants at their
nominal amount. Obligations in respect of pollution emissions are not taken
into account until actual emissions exceed the emission allowances held by
the Gerresheimer Group. The obligation is recognized at the fair value of the
emission allowances to be procured. Any emission allowances acquired from
third parties are recognized at cost and reported under “other receivables”.
Property, plant and equipment
Property, plant and equipment is carried at cost less depreciation and any
impairment losses. As well as directly attributable costs, the cost of property,
plant and equipment also includes apportioned indirect material, indirect
labor and production-related administrative expenses. Borrowing costs are
recognized solely for qualifying assets. Qualifying assets are assets that take
at least twelve months to get ready for use. Property, plant and equipment
is generally subject to depreciation on a straight-line basis. Depreciation is
based on useful lives estimates as follows:
in years
Buildings 10 to 50
Plant and machinery 5 to 15
Fittings, tools and equipments 3 to 10
Repair and maintenance expenses are recognized in the consolidated income
statement in the period in which they are incurred. Gerresheimer recognizes
subsequent costs of major servicing and furnace overhauls as part of the
carrying amount if it is probable that they will result in future economic
benefits and can be measured reliably.
Government grants
Government grants are recognized if they have been approved and there is
reasonable assurance that the entity will comply with the conditions attached
to them. Grants for purchase of assets are released to income in equal
annual installments over the expected useful life of the subsidized asset.
Grants paid as compensation for expenses already incurred shall be recog-
nized in profit or loss in the period in which the corresponding claim arises.
Investment property
Investment property comprises property held on a long-term basis to earn
rental income and/or for capital appreciation. It is recognized at cost less
accumulated impairment losses (cost model).
Leases
Economic ownership of leased assets is attributed to the contracting party in
the lease to which the substantial risks and rewards incidental to ownership
of the asset are transferred.
If substantially all risks and rewards incidental to ownership of the leased
asset are attributable to the lessee (finance lease), the lessee must recognize
the leased asset in the balance sheet. At the commencement of the lease
term, the leased asset is capitalized at the lower of fair value or present value
of the future minimum lease payments and is depreciated over the shorter
of the estimated useful life or the lease term. Depreciation is recognized as
expense in the income statement. The lessee recognizes a lease liability equal
to the carrying amount of the leased asset at the commencement of the
lease term. The lease liabilities are reported under other financial liabilities. In
subsequent periods, the lease liability is reduced using the effective interest
method and the carrying amount is adjusted accordingly. The lessor in a
finance lease recognizes a receivable in the amount of the net investment
in the lease. Lease income is broken down into repayments of the lease
receivable and finance income. The lease receivable is reduced using the
effective interest method and the carrying amount is adjusted accordingly.
If substantially all risks and rewards are attributable to the lessor (operating
lease), the leased asset is recognized in the balance sheet by the lessor.
Measurement of the leased asset is then based on the accounting policies
applicable to that asset. The lease payments are recognized in profit or loss on
a straight-line basis by the lessor. The lessee in an operating lease recognizes
the lease payments made during the term of the lease in profit or loss.
124 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
Impairment
Property, plant and equipment, investment property, goodwill and intangible
assets are tested for impairment if circumstances or other events indicate
that their carrying amount exceeds their recoverable amount. Goodwill and
other intangible assets with indefinite useful lives are additionally tested
annually for impairment at the level of the cash-generating units to which
they belong. An impairment loss is recognized in the amount by which the
carrying amount of an asset exceeds its recoverable amount. The recoverable
amount is the higher of its fair value less costs of disposal and its value in use.
For assets other than goodwill, impairment losses are reversed if the reasons
for impairment cease to exist. Impairment losses are recognized in other
operating expenses and any subsequent impairment reversals in other
operating income.
Investments Accounted for Using the Equity Method
Investments in associates are initially recognized at cost. They are subsequently
measured using the equity method, under which the carrying amount is
adjusted in accordance with changes in the Group’s share in the equity of
the associate remeasured at the acquisition date. The percentage of the
investment is calculated on the basis of the circulating shares. If an asso-
ciate has a different functional currency than the reporting currency for the
consolidated financial statements, its financial statements are translated into
the reporting currency prior to equity method adjustment.
Investments in associates are reported under the position “Investments
accounted for using the equity method”. The share of profit or loss of
associated companies is recognized in results of operations, as Gerresheimer
holds such investments not for financial purposes but as part of the Group’s
operating business.
Inventories
Inventories are measured at the lower of cost and net realizable value. Cost is
generally the average cost, and includes production and material overheads
in addition to direct costs. Other expenses attributable to production are
also included in the costs of conversion. Besides these production costs,
the cost of sales shown in the consolidated income statement also include
the cost of unused capacity.
Financial assets
Financial assets are recognized when Gerresheimer becomes a contracting
party in relation to the financial asset. Initial recognition is at fair value
plus directly attributable transaction costs, with the exception of financial
assets initially measured at fair value through profit and loss. Transaction
costs directly attributable to the acquisition of financial assets that are
measured at fair value through profit or loss are recognized directly in the
consolidated income statement. The settlement date, i.e. the date on which
the asset is delivered to or by the Gerresheimer Group (date of transfer of
ownership), is relevant for the first-time recognition and derecognition of
regular purchases or sales.
Upon acquisition, financial assets are classified into categories as follows.
The classification is reviewed at each balance sheet date.
Financial assets measured at fair value through profit and loss: Financial assets
initially measured at fair value through profit and loss comprise assets held
for trading. Any gain or loss on subsequent measurement is recognized in
the consolidated income statement.
At Gerresheimer, these assets exclusively comprise the derivative financial
instruments included in other financial assets that are not determined to
be an effective hedge. Gerresheimer does not make use of the fair value
option. Please see Note (6) for further explanations on derivative financial
instruments.
Held-to-maturity financial investments: Non-derivative financial assets
with fixed or determinable payments and fixed maturities are classified as
held-to-maturity investments when the Group has the positive intention
and ability to hold to maturity. After initial recognition, held-to-maturity
investments are subsequently measured at amortized cost using the effective
interest method less any impairment losses. Gains and losses are recognized
in profit or loss when an investment is derecognized or impaired and through
the amortization process.
No financial assets are classified in this category at Gerresheimer.
Available-for-sale financial assets: Available-for-sale financial assets are
financial assets that are not allocated to any of the other categories based
on their objective characteristics or have been assigned to this category by a
designation of the entity. Subsequent to initial measurement, available-for-
sale financial assets are generally measured at fair value. Unrealized gains or
losses are recognized in other comprehensive income. Upon derecognition
or impairment of an asset, any accumulated gain or loss that had previously
been recognized in other comprehensive income is to be reclassified to the
consolidated income statement.
Gerresheimer has classified investments in other companies as “available-
for-sale”. As there is no quoted price for these investments and their fair
value cannot be reliably determined using a valuation technique, the financial
assets are measured at cost less accumulated impairment losses.
The position “Other” included in other financial assets is classified in the
same category.
Loans and receivables: Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active
market. After initial recognition, loans and receivables are measured at
amortized cost using the effective interest method less any impairment. Gains
and losses are recognized in profit or loss when the loans and receivables
are derecognized or impaired.
125CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
This category includes trade receivables, loans, refund claims and bills of ex-
change included in other financial assets as well as cash and cash equivalents.
If there are indications of impairment for balances in the loans and receivables
category, an impairment test is carried out. For this purpose, it is determined
whether the carrying amount exceeds the present value of the estimated
future cash flows discounted at the financial asset’s effective interest rate.
In this case, an impairment loss is recorded in the consolidated income
statement for the difference. If an impairment ceases to exist, the impairment
loss is reversed, though not in excess of amortized cost.
Financial assets are derecognized when the contractual rights to the cash
flows from the financial asset expire or the financial asset as well as all
risks and rewards of ownership of the financial asset are transferred to a
third party.
Objective evidence for impairment losses can be—among other things—
an increased probability that the borrower will enter bankruptcy or other
financial re-organization, significant financial difficulty of the contractual
party, the disappearance of an active market for that financial asset or a
breach of contract.
No reclassifications between the categories were made either in the financial
year or in the prior year.
Customer-specific construction contracts
Revenues from customer-specific construction contracts are accounted for
using the percentage of completion method. The work performed, including
the share in the profit or loss, is recognized in revenues by reference to the
stage of completion of the contract. Gerresheimer determines the applicable
stage of completion based on the portion of contract costs incurred for work
performed to date relative to the estimated total contract costs (cost to cost
method). When contract costs incurred to date plus recognized profits less
recognized losses exceed progress billings, the surplus is shown as amounts
due from customers for contract work. These amounts are reported as part
of trade receivables. When progress billings exceed contract costs incurred to
date plus recognized profits less recognized losses, the surplus is shown as
amounts due to customers for contract work. These amounts are reported
as part of other liabilities.
Revenues from customer-specific development contracts within our new
Advanced Technologies Division are equally accounted for using the percen-
tage of completion method. The stage of completion of the development
projects, which are mainly affected by the employees’ working hours engaged
in these projects, is determined based on the hours spent to date in relation
to the estimated total project hours (so-called hours to hours method). The
application of the proportional part of working hours spent to date in relation
to total revenues results in the revenue to be recognized for that period. As
soon as project revenue exceeds the value of progress billings, the surplus is
accounted for as development project due from customers. These amounts
are reported as part of trade receivables. As soon as progress billings exceed
project revenue, the surplus is accounted for as development project due
to customers as part of other liabilities.
Other receivables
Tax receivables, prepayments made and other non-financial assets are
recognized at nominal values less accumulated impairment losses.
Cash and cash equivalents
Cash and cash equivalents are carried as financial assets at nominal value.
Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignifi-
cant risk of changes in value. Cash equivalents have terms of three months
or less—starting from the date of acquisition.
Non-current assets and disposal groups held for sale
This item is presented in the balance sheet if there are individual non-current
assets or groups of assets that are able to be sold in their current condition
and their sale is highly probable within twelve months.
Non-current assets in a disposal group are no longer depreciated or amortized.
Instead, they are recognized at the lower of carrying amount and fair value
less costs to sell. If the carrying amount exceeds the comparison figure, an
impairment loss in the amount of the difference is recognized by Gerresheimer
in the consolidated income statement.
Provisions for pensions and similar obligations
The Group has a number of pension schemes geared to the regulations and
practices of the countries they apply to. Commitments have also been made
in the US to provide additional post-employment medical care.
When accounting for pensions and other post-employment benefits, a
distinction is made between defined benefit plans and defined contribution
plans. For defined contribution plans, the Group´s obligation is limited to the
performance of current annual contributions to an external pension fund.
There is no legal or constructive obligation to pay any additional contribu-
tions in cases where the fund cannot meet its performance obligations for
the current and prior years. Accordingly, Gerresheimer does not recognize
any assets and liabilities in relation to defined contribution plans with the
exception of contribution payments in advance and arrears.
Under defined benefit plans, on the other hand, the Group has an obligation
to pay pension benefits. The amount of the defined benefit obligation is
tied to factors such as age, years of service and salary. The cost of providing
benefits under defined benefit plans is determined separately for each
plan using the projected unit credit method. Actuarial gains and losses are
recognized in total in the position “Other comprehensive income”. Past
service cost is immediately expensed.
126 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
The defined benefit liability is the net total of the present value of the
defined benefit obligation less the fair value of plan assets out of which the
obligations are to be settled directly.
The obligations are measured annually by independent actuaries. The interest
payable on net pension obligations is recognized in net finance expense.
Stock appreciation rights (phantom stocks)
Stock appreciation rights are accounted for at fair value. The fair value of
phantom stocks is recognized pro rata temporis in personnel expenses and,
at the same time, as a provision because there is an obligation to make a
cash settlement. The total expense to be recognized until the exercise date
of phantom stocks is calculated based on the respective fair value of the
phantom stocks and the expected staff turnover rate among beneficiaries;
these parameters are reviewed at each balance sheet date.
Other provisions
Other provisions are recognized if a current obligation exists as a result of a
past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, and the amount of the
obligation can be reliably estimated. Non-current provisions are discounted.
If a contractual claim to refund from a third party is sufficiently probable,
the refund is recognized as an asset in the consolidated balance sheet.
Other provisions also include partial retirement obligations on a block model
basis. The salary portion and the top-up amounts paid by the employer are
recognized pro rata temporis during the active phase over the employee’s
remaining term of service. While the top-up amounts are paid out from
the beginning of the active phase, the salary amounts are payable from the
beginning of the passive phase.
Post-employment benefits are accounted for when an obligation exists on
the basis of a detailed formal plan or a specific offer relating to termination
benefits. Benefits not expected to be paid in full within twelve months are
discounted to the present value.
Current and deferred income taxes
The incorporated companies included in the Gerresheimer Group (with the
exception of the foreign subsidiaries) form a tax group for income tax pur-
poses in the financial year 2018. Gerresheimer AG fulfills the role of taxpayer
and/or tax creditor. As a result, the German subsidiaries consolidated into
the Group do not generally incur income taxes. In addition to the calculation
of current income taxes, deferred tax assets or liabilities are recognized for
differences between the amounts recognized in the Company’s tax accounts
and its IFRS balance sheet. These represent a future tax burden (deferred tax
liabilities) or future tax relief (deferred tax assets). Deferred tax assets are
also recognized for tax benefits from the use of tax loss carryforwards and
tax credits. The calculation is based on the tax rates valid as of the reporting
date, unless a tax rate change has already been resolved for the period
of expected reversal of the temporary differences or expected use of loss
carryforwards and tax credits. Deferred tax assets are only taken into account
if realization of the tax benefits within the planning horizon seems likely.
Changes in recognized deferred tax assets or liabilities generally result in
deferred tax expense or income. As far as the changes in deferred taxes result
from items recognized in other comprehensive income, deferred taxes as
well as their changes are equally recognized in other comprehensive income.
Financial liabilities
Financial liabilities include non-derivative financial liabilities and negative
fair values of derivative financial instruments.
A non-derivative financial liability is initially recognized when a contractual
obligation to payment comes into being. Initial measurement is at fair value
less any transaction costs. Subsequent measurement is at amortized cost
using the effective interest method. Any differences between the fair value
(less any transaction costs) on initial recognition and the amount repayable
on maturity are recognized in the consolidated income statement over the
term of the liability.
Derivative financial instruments not determined to be an effective hedge must
be classified as held for trading and accounted for at fair value through profit
or loss. If their fair value is negative, they are recognized in financial liabilities.
Gerresheimer does not make use of the fair value option. Please see Note (6)
for further explanations on accounting for derivative financial instruments.
Put options, where Gerresheimer is an option writer, are classified on initial
recognition as at fair value through profit and loss.
Financial liabilities are derecognized once the contractual obligations to
payment arising from the liabilities have been settled, removed or canceled
and have therefore expired.
Other liabilities
Prepayments received, liabilities from other taxes or social security and other
non-financial liabilities are accounted for at amortized cost.
127CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
Revenue recognition
Revenue is recognized when the significant risks and rewards incidental
to ownership of the goods to be delivered have been transferred to the
customer, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, no continuing right
of disposal of the goods exists and the amount of revenue can be measured
reliably.
Revenue is stated net of sales taxes, other taxes and sales deductions at the
fair value of the consideration received or to be received. Sales deductions
are estimated amounts for rebates, cash discounts and product returns.
They are deducted at the time the sales are recognized, and appropriate
provisions are recorded. Sales deductions are estimated primarily on the
basis of historical experience and specific contractual terms. Interest income
is recognized using the effective interest method.
If the outcome of a construction contract can be estimated reliably, then
contract revenue is recognized in the profit or loss in proportion to the
stage of completion of the contract. The stage of completion is assessed
as the ratio of the contract costs incurred to the total expected contract
costs. The stage of completion of the development projects within our new
Advanced Technologies Division is determined based on the hours spent
to date in relation to the estimated total project hours (so-called hours to
hours method). If the stage of completion of a customer-specific contract
cannot be estimated reliably, contract revenue is recognized to the extent
of contract costs incurred that are likely to be recoverable.
Contract costs are recognized in profit or loss as incurred unless they create
an asset related to future contract activity. When it is probable that total
contract costs will exceed total contract revenue, the expected loss is rec-
ognized as an expense immediately in the consolidated income statement.
Judgments and estimates
Preparation of the consolidated financial statements requires estimates,
assumptions and judgments that affect the recognition and measurement of
assets and liabilities, the amount of recognized income and expense and the
disclosure of contingent liabilities and receivables. Although the estimates are
subject to ongoing review and made to the best of management’s knowledge
of current events and transactions, actual future results may differ from the
estimated amounts. Changes in accounting estimates are recognized in the
period of the change if the change affects that period only, and in the period
of the change and future periods if the change affects both.
The main future-related assumptions subject to estimation uncertainty are
set out in the following.
Acquisitions of subsidiaries are accounted for using the acquisition
method. This stipulates that all identifiable assets and liabilities of an entity
acquired in a business combination are measured at acquisition date fair
values. Measuring acquisition date fair values requires estimates. The fair
values of land, buildings and office equipment are generally measured on
the basis of independent appraisers. Gerresheimer also uses independent
appraisers to value intangible assets, depending on the type of asset and
the complexity of valuation method. Valuations require regular management
estimates regarding the payments achievable with the assets and regarding
the appropriate discount rate.
In order to assess the recoverability of goodwill, it is necessary to determine
the value in use of the cash-generating unit to which the goodwill has been
allocated. Measuring the value in use requires an estimation of future cash
flows for the cash-generating unit and of an appropriate discount rate. If
the future cash flows prove lower than management estimated, impairment
may be required. For further information, please see Note (18).
As a rule, pensions and similar obligations for employee benefits are
provided on a defined benefit basis. The defined benefit obligation is
measured in accordance with actuarial methods based on assumptions
regarding the discount rate, increases in salaries and pensions, and life
expectancy. These can differ considerably from actual developments
because of variations in the market and economic environment. In addition,
Gerresheimer provides subsidized healthcare for retired employees in the
USA. Should it become necessary to modify the assumptions relating to the
aforementioned parameters, this may have an effect on the future amount
of pension costs, equity, and provisions for pensions and similar obligations.
For further information, please see Note (28).
Gerresheimer recognizes bad debt allowances for doubtful receivables
in order to account for impairment losses in the event that customers are
unable to pay. In determining the appropriateness of the bad debt allowances
recognized for doubtful receivables Gerresheimer considers the age structure
of receivables, past experience with regard to derecognition of receivables,
information on customer credit ratings and changes in payment behavior.
In the event that a customer’s financial situation deteriorates, the extent
of actual defaults may exceed the amount of the bad debt allowances. For
further information, please see Note (25).
The Gerresheimer Group operates in many different countries and is con-
sequently subject to multiple different tax jurisdictions. If no group taxation
regimes such as fiscal unity are used, taxable income tax, tax receivables and
payables, temporary differences, tax loss carryforwards and the resulting
deferred tax assets and liabilities must be determined separately for each
128 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
taxable entity. The determination of current and deferred taxes requires
separate judgment. Deferred tax assets are recognized insofar as their reali-
zation within the planning horizon is likely to be expected. This may lead to
a restriction of deferred tax assets to the amount of deferred tax liabilities.
The realization of deferred tax assets thus notably depends on the ability
to generate sufficient taxable income for the applicable type of tax and tax
jurisdiction in the future. Various factors have to be taken into account in
assessing the probability of the inflow of future economic benefits, such
as corporate planning, restrictions on tax loss carryforwards, minimum
taxation and tax planning strategies. The amounts recognized for deferred
tax assets may decrease if the estimates of budgeted taxable income are
to be revised or if changes in tax law restrict the timescale of tax benefits
or the extent to which they can be realized. For further information, please
see Note (15) and (23).
Stock appreciation rights are accounted for in the Gerresheimer Group at
fair value. The fair value of phantom stocks is recognized pro rata temporis
in personnel expenses and, at the same time, as a provision because there
is an obligation to make a cash settlement. Their fair value is determined
using a recognized option pricing model (binomial model). The parameters
used in this model and the fair values of each tranche are presented in
Note (29). Should it become necessary to modify the assumptions relating to
the aforementioned parameters, this may have effects on the future amount
of expenses, equity and provisions for obligations relating to Gerresheimer
stock appreciation rights.
Revenue from customer-specific construction contracts is accounted for
using the percentage of completion method. The work performed, including
the share in the profit or loss, is recognized in revenues in accordance with
the stage of completion. Gerresheimer determines the applicable stage of
completion as the ratio of contract costs incurred to expected total contract
costs (cost to cost method) respectively in case of customer- specific develop-
ment projects within our new Advanced Techno logies Division according to
the ratio of working hours spent in relation to the total estimated working
hours (hours to hours method). The main estimates relate to the total con-
tract costs and the contract costs to complete the contract as well as the
working hours needed to finish the development projects. These estimates
are reviewed and adjusted as necessary on an ongoing basis.
(6) Financial Risk Management and Derivative Financial Instruments
Derivative financial instruments are used exclusively for hedging purposes.
The Group’s financial risks are monitored centrally as part of Group-wide
financial risk management. Identified potential risks are managed using
suitable hedging instruments on the basis of clearly defined guidelines.
Besides price risks from fluctuations on money and capital markets as well
as international commodities markets, risk management also targets credit
and liquidity risk.
In line with intra-Group financing guidelines, exchange rate risks are
hedged using forward exchange contracts and currency swaps. Transaction
risks generally solely represent exposures in currency management. The
currency derivatives are generally used to hedge specific hedged items and
are classified as hedging instruments.
Credit risks resulting from the Group’s trade relationships are monitored
through credit and receivables management and by the sales divisions of
operating entities. With the aim of avoiding losses on receivables, customers
are subject to ongoing internal credit checks. Receivables from customers
that do not have a first-class credit rating are generally insured.
The Group’s liquidity situation is monitored and managed using sophisti-
cated planning instruments. Risks in connection with the procurement of
funds are identified and monitored on the basis of rolling financial and
liquidity plans.
129CONSOL I DATED F INANCI AL S TATEMENT S› Notes to the Consolidated Financial Statements
All derivative financial instruments are measured at fair value. Derivative
financial instruments with a positive fair value are recognized in other finan-
cial assets and derivatives with negative fair values in other financial liabilities.
The fair values of derivative financial instruments are measured using the
applicable exchange rates, interest rates and credit standings at the balance
sheet date. The fair value is the price that a Group entity would receive or have
to pay to transfer a derivative financial instrument in an orderly transaction
between market participants at the balance sheet date.
Changes in the fair value of derivative financial instruments are recognized
immediately in profit or loss, except derivatives designated as a hedge of
expected future cash inflows or outflows (cash flow hedges). The portion of
any changes in the fair value of a cash flow hedge that is determined to be
an effective hedge is recognized by Gerresheimer in other comprehensive
income. The amounts recognized in other comprehensive income are
reclassified to the consolidated income statement in the period in which
the hedged cash flows affect profit or loss.
Due to their short-term nature, the currency derivatives used to hedge
exchange rate risk are not designated as hedge instruments by Gerresheimer.
Changes in their fair value are recognized in profit or loss in accordance
with the general rules on accounting for derivatives.
(7) Consolidated Cash Flow Statement
The consolidated cash flow statement shows how the financial resources of
the Gerresheimer Group have changed due to cash inflows and outflows
during the financial year. The cash flow effects of acquisitions, divestments
and other changes in the consolidated group are presented separately. The
item “Cash received in connection with divestments, net of cash paid”
in the prior year refers to the sale of the Life Science Research Division
and contains cash inflow from a purchase price adjustment of prior-year
accounted receivables. In the reporting period, the item “Cash paid for
the acquisition of subsidiaries, net of cash received” includes the purchase
price component paid as of the reporting date for the acquisition of Sensile
Medical AG (Olten/Switzerland), reduced by the company’s cash funds at
the date of initial consolidation. Furthermore, the position “Acquisition of
non-controlling interests” in the current financial year reflects the purchase
of the remaining 25% shareholding in Triveni Polymers Private Ltd. (New
Delhi/India). Financial resources as reported in the consolidated cash flow
statement comprise cash and cash equivalents, which is cash on hand,
checks and bank balances, diminished by bank overdrafts.
The change in liabilities from financing activities is as follows:
Cash flows Non-cash changes
Nov. 30, 2018in EUR k
Nov. 30, 2017
Cash inflow
Cash outflow
Currency effects
New Contracts
Fair value changes
Promissory loans 673,799 – – – – 247 674,046
Bond 299,687 – -300,000 – – 313 –
Liabilities to banks 430 390,270 -133,663 7,266 – 333 264,636
Finance lease liabilities 8,004 – -682 276 149 – 7,747
981,920 390,270 -434,345 7,542 149 893 946,429
The item “Other financial liabilities” as reported in the consolidated balance
sheet comprises liabilities, which are not reported in the cash flow from
financing activities in the consolidated cash flow statement.
130 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Income Statement
NOTES TO THE CONSOLIDATED INCOME STATEMENT
(8) Revenues
Revenues break down as follows:
in EUR k 2018 2017
By Division
Plastics & Devices 751,337 757,179
Primary Packaging Glass 605,230 591,994
Advanced Technologies 12,860 –
Segment revenues 1,369,427 1,349,173
Intra-Group revenues -1,697 -918
Revenues 1,367,730 1,348,255
in EUR k 2018 2017
By Region1)
Europe 459,685 428,906
Germany 304,500 313,058
Americas 374,806 373,704
Emerging markets 206,841 206,497
Other regions 21,898 26,090
Revenues 1,367,730 1,348,255
1) The revenues shown here for Europe exclude revenues in Germany, Poland, Russia and Turkey, and the revenues shown for the Americas exclude revenues in Argentina, Brazil, Chile, Colombia and Mexico.
IQVIA did not modify its definition of emerging markets in 2018, therefore
22 countries are classified as emerging markets as before. According to the
current definition employed by IQVIA, emerging market revenues comprise
revenues in Algeria, Argentina, Bangladesh, Brazil, Chile, China, Colombia,
Egypt, India, Indonesia, Kazakhstan, Mexico, Nigeria, Pakistan, Philippines,
Poland, Russia, Saudi Arabia, South Africa, Thailand, Turkey and Vietnam.
Revenues include EUR 63,778k (prior year: EUR 42,162k) of customer-specific
contract revenue recognized. Other revenues mainly result from sales of
goods.
(9) Cost of Sales
Cost of sales comprises the cost of goods manufactured and sold and
the purchase cost of merchandise sold. Cost of conversion includes direct
costs such as direct material, labor and energy as well as indirect costs such
as depreciation of production plant and repairs. In addition, cost of sales
includes a total of EUR 99,045k (prior year: EUR 84,811k) of depreciation,
amortization and impairment losses, of which amortization of fair value
adjustments from purchase price allocations amount to EUR 10,284k (prior
year: EUR 107k). This increase results from the acquisition of Sensile Medical,
as technologies in the amount of EUR 394,910k were acquired.
The cost of inventories recognized as an expense during the financial year
was EUR 365,587k (prior year: EUR 348,364k).
(10) Selling and Administrative Expenses
Selling expenses comprise personnel and non-personnel expenses for the
sales organizations and distribution (including freight and commissions). In
addition, selling expenses include amongst depreciation and amortization
of EUR 32,163k (prior year: EUR 35,226k), of which amortization of fair
value adjustments from purchase price allocations amount to EUR 30,323k
(prior year: EUR 33,433k), also one-off expenses in the financial year 2018
with respect to changes in the Management Board of Gerresheimer AG in
the amount of EUR 412k, which will be adjusted in the calculation of the
Adjusted EBITDA.
Administrative expenses comprise personnel and non-personnel expenses
for administrative functions, depreciation and amortization amounting to
EUR 5,718k (prior year: EUR 4,673k) as well as one-off expenses in the
financial year 2018 with respect to changes in the Management Board of
Gerresheimer AG in the amount of EUR 401k, which will be adjusted in the
calculation of the Adjusted EBITDA.
(11) Other Operating Income
Other operating income break down as follows:
in EUR k 2018 2017
Income from refund claims against third parties and income from transaction service agreements 13,303 4,224
Income from the derecognition of liabilities 5,991 6,088
Income from the reversal of provisions 4,678 9,177
One-off income 1,086 279
Income from sale of scrap 1,071 825
Income from other tax claims 57 2,547
Income from the disposal of intangible assets and property, plant and equipment 30 1,704
Income from the fair value measurement of the put option Triveni – 3,614
Exchange gains 225 388
Sundry other income 3,555 4,794
Other operating income 29,996 33,640
Income from refund claims against third parties is mainly due to a one-time,
non-recurring compensation payment from an inhaler customer as a result
of the loss of this customer for our plant in Kuessnacht (Switzerland), with
an amount of EUR 9,000k. The business of the inhaler customer fell short
of his expectations, and as a consequence the customer ceased to place
orders for our plant in Kuessnacht. We have received total compensation
that roughly corresponded to the affected plant’s contribution in the financial
year 2018. In addition, this item comprises a refund claim of EUR 2,611k
from a supplier. This position also includes income from transaction service
agreements from completed divestments of EUR 107k.
The income from the derecognition of liabilities in the amount of EUR 5,991k
(prior year: EUR 6,088k) results from liabilities, which have been accounted
for in prior periods and a claim is no longer probable and the respective
rights are no longer enforceable, for example due to limitation in time.
131CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Income Statement
Income from the reversal of provisions mainly results from provisions for
guarantees, which have been accounted for in prior periods and are no
longer needed. For further information, please see Note (30).
One-off income of the current financial year mainly refers to the reversal of a
provision, which was set up for the post-contractual non-compete covenant
of a former Chairman of the Management Board of Gerresheimer AG.
Exchange gains and losses from the translation of foreign currency operating
receivables and payables and the net gain or loss from the remeasurement
of derivative financial instruments used as hedges of operating foreign
currency risks are netted and reported in other operating income or other
operating expenses. Exchange gains or losses from financing activities are
netted and reported on a net basis in the finance expense.
The item “Sundry other income” of the other operating income includes a
wide range of single issues of the operating business, such as rental income,
income from the release of bad debt allowances and similar income positions.
(12) Restructuring Expenses
Gerresheimer recognizes expenses as restructuring expenses if they are
incurred for a program planned and controlled by management that materially
changes either the scope of a business undertaken by the Group or the
manner in which that business is conducted. Due to their materiality to the
Gerresheimer Group, restructuring expenses are reported separately from
expenses which relate to measures that do not meet the foregoing definition.
In the reporting period restructuring expenses of EUR 11,274k primarily
result from two main issues. On the one hand, it incorporates expenses in
connection with the closure of our plant in Kuessnacht (Switzerland) which
was announced in the second quarter 2018. Moreover, management has
decided within its operational and strategic planning to adjust employee
capacities by means of re-organization of the Plastics & Devices Division.
This re-organization is based on the strategic decision to increase capacity
in Eastern Europe and to transfer production into this region. Restructuring
expenses mainly contain expenses for severance payments (see Note (30)).
In the prior financial year, restructuring expenses of EUR 2,558k mostly include
expenses in connection with a decided and announced factory closure in
the Primary Packaging Glass Division, as well as other portfolio adjustments,
which can be seen in the context of process standardization and optimization
of locations. In the financial year 2018 an amount of EUR 424k was reversed
in connection with the resctructuring provision recognized in 2017.
Restructuring expenses and income from the release of restructuring provisions
are netted in restructuring expenses.
(13) Other Operating Expenses
Other operating expenses break down as follows:
in EUR k 2018 2017
One-off expenses 11,031 2,899
Research and development 2,919 3,508
Expenses from network charges 1,352 –
Expenses from Supervisory Board remuneration and expense reimbursement 1,193 1,114
Loss from the fair value measurement of the put option Triveni 1,120 –
Loss from the disposal of fixed assets 302 269
Sundry other expenses 2,106 860
Other operating expenses 20,023 8,650
Significant components of other operating expenses represent one-off
expenses of EUR 11,031k (prior year: EUR 2,899k). The one-off expenses
in the current financial year in the amount of EUR 5,479k mainly relate to
the changes in the Management Board of Gerresheimer AG. This mostly
includes expenses in relation to the unexpected departure of the former
Chief Executive Officer for personal reasons from the Management Board
of Gerresheimer AG, which had already been announced in the first quarter
2018. Beyond that we have recognized expenses in connection with the
departure of one other member of the Management Board in the financial
year 2019. Furthermore, expenses amounting to EUR 2,420k in relation to
the announced closure of our plant in Kuessnacht (Switzerland), which were
not classified as restructuring expenses and incorporated in this position.
Essentially, this refers to expenses for the production transfer for other
customers of this plant. Moreover, this item contains expenses in connection
with planned and partially successfully completed acquisition projects of
EUR 2,121k (prior year: EUR 881k).
Due to the final fair value measurement of the put option as of May 31,
2018, which is based on the local EBITDA of the company Triveni Polymers
Private Ltd. (New Delhi/India), for its financial year ending March 31, 2018,
other operating expenses amount to EUR 1,120k.
In addition, in the third quarter 2018, all large electricity-consuming en-
terprises that applied for an exemption from the network charges under
section 19 paragraph 2 StromNEV in the version of August 4, 2011, including
the corresponding subsidiaries of Gerresheimer AG, were obliged by the
Federal Network Agency to pay additional network charges for the years
2012 and 2013 in the amount of EUR 1,352k.
Exchange gains and losses from the translation of foreign currency operating
receivables and payables and the net gain or loss from remeasurement of
derivative financial instruments used as hedges of operating foreign currency
risks are netted and reported in other operating income or other operating
expenses. Exchange gains or losses from financing activities are netted and
reported in the finance expense.
132 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Income Statement
The item “Sundry other expenses” of the other operating expenses includes
a wide range of single issues of the operating business, such as fees, other
taxes and similar expenses.
(14) Net Finance Expense
in EUR k 2018 2017
Interest income 2,437 4,362
Interest expense -29,746 -34,995
Other finance expense -4,953 -4,675
Net finance expense -32,262 -35,308
Thereof: Net interest expense on the defined benefit liability -2,770 -3,043
Interest expense comprises interest expenses on liabilities to banks, the
bond repaid as planned and in full on May 21, 2018, promissory loans,
finance lease liabilities as well as other financial liabilities and provisions.
The item “Other finance expense” mainly comprises exchange gains and
exchange losses from financing activities as well as related gains and losses
from hedging transactions.
Interest expenses in connection with the put option Triveni (EUR 1,373k;
prior year: EUR 1,528k) are classified as “At fair value through profit and
loss”. All other income from financial assets is classified as “Loans and
receivables”, and all other expenses from financial liabilities are classified
as “Liabilities carried at amortized cost”.
(15) Income Taxes
in EUR k 2018 2017
Current income taxes -30,941 -41,721
Deferred income taxes 54,872 -715
Income taxes 23,931 -42,436
In the reporting period, income from income taxes of EUR 23,931k were
significantly influenced by the revaluation of the recognized deferred taxes
of our US subsidiaries included in the consolidated financial statements due
to the US tax reform signed on December 22, 2017 of EUR 44,767k as well
as deferred tax income at a German subsidiary due to future usability of loss
carryforwards recognized prior to the establishment of the consolidated tax
group in the amount of EUR 8,732k. Without these two positive one-off
effects of EUR 53,499k, there would have been an income tax expense of
EUR 29,568k. In the financial year 2018 the Group’s tax ratio would thus
amount to 27.6% (prior-year period: 29.2%).
Deferred income taxes in connection with items which are recognized in the
other comprehensive income result in an decrease of equity by EUR 1,050k
(prior year: EUR 1,473k), of which EUR 1,050k (prior year: EUR 1,458k)
relate to income taxes in connection with the remeasurement of defined
benefit obligation pension plans. Additional information on deferred taxes
is provided in Note (23).
The differences between expected and effective tax expense in the Group
reconcile as follows:
in EUR k 2018 2017
Net income before income taxes 107,197 145,488
Expected tax expense: 29% (prior year: 29%) -31,087 -42,192
Differences:
Loss carryforwards without deferred tax assets -2,500 -2,460
Different foreign tax rates 7,238 3,569
Non-deductible expenses -1,494 -2,995
Tax-free income and tax benefits -186 1,913
Effects from changes in tax rates 45,630 291
Change in value allowance for deferred tax assets 7,400 -728
Taxes from prior periods -931 295
Other -139 -129
Total differences 55,018 -244
Income taxes 23,931 -42,436
Tax rate -22.3% 29.2%
The corporation tax rate in Germany remains unchanged compared to the
prior year at 15.0% plus a 5.5% solidarity surcharge on corporation tax
and trade tax of approximately 13.0%. This results in a combined tax rate
of approximately 29%.
The tax rates for subsidiaries whose registered offices are not in Germany
vary between 14.1% and 34.0% (prior year: 14.1% and 38.0%). Some of
the subsidiaries in China benefited from tax privileges in the current financial
year under review, with a resulting tax rate of 15.0%.
Effects from profit and loss transfer agreements
The taxable earnings of 14 German consolidated entities in the same income
tax group in the financial year 2018 are assigned to Gerresheimer AG as
fiscal unity parent.
Effective December 1, 2018, two tax groups have been formed for income
tax purposes in Germany: A tax group comprising Gerresheimer AG with
Gerresheimer Holdings GmbH and another comprising Gerresheimer Group
GmbH with the remaining consolidated German subsidiaries. Formation of
the tax group with Gerresheimer Group GmbH allows tax loss carryforwards
of Gerresheimer Group GmbH to be utilized in subsequent financial years
and consequently resulted in a remeasurement of deferred tax assets on
such loss carryforwards in the financial year 2018. This had a positive effect
on deferred taxes in the financial year 2018 in the amount of EUR 8,732k.
133CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Income Statement› Other Information on the Consolidated Income Statement
Deferred taxes on tax loss carryforwards
Deferred tax assets in the amount of EUR 75,400k (prior year: EUR 126,759k)
were not recognized for tax loss carryforwards at Group companies of
Gerresheimer AG, as the tax loss carryforwards are not expected to be utilized
in the next five years. This includes corporate tax loss carryforwards of EUR 11k
(prior year: EUR 27,892k) and trade tax loss carryforwards of EUR 15,151k
(prior year: EUR 47,868k) for domestic subsidiaries.
Deferred tax assets of EUR 9,344k (prior year: EUR 5,421k) were recognized for
tax loss carryforwards at foreign Group companies despite losses in the current
financial year under review and in the prior year, as the companies concerned
expect to generate future taxable profits. There is sufficient reliability that
the tax loss carryforwards can be realized.
Temporary loss carryforwards in the amount of EUR 39,170k, which can
be used in the period from 2019 to 2025, relate in their entirety to foreign
companies.
Deferred tax liabilities in the amount of EUR 34,769k (prior year: EUR 31,703k)
for taxable temporary differences from investments in fully consolidated
subsidiaries were not recognized, as Gerresheimer AG is able to control the
timing of the reversal of the temporary differences and these will unlikely
reverse in the foreseeable future.
(16) Earnings per Share
Non-diluted earnings per share are calculated by dividing net income at-
tributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
No new shares were issued in the financial years 2018 and 2017, such that
the weighted average number of shares is 31,400,000 in both financial years.
The phantom stock program (see Note (29)) stipulates that Gerresheimer AG
has the option of settling the amount to which beneficiaries are entitled
to either by issuing shares of Gerresheimer AG or by cash payment when
the exercise target is reached. As the Company plans to settle in cash, the
program has no dilutive effect. Warrants or conversion rights do not exist.
Diluted and non-diluted earnings per share are therefore identical.
in EUR k 2018 2017
Net income 131,128 103,052
Thereof: Attributable to equity holders of the parent 128,965 100,887
Thereof: Attributable to non-controlling interest 2,163 2,165
in thousand 2018 2017
Average number of issued ordinary shares 31,400 31,400
in EUR 2018 2017
Diluted and non-diluted earnings per share 4.11 3.21
OTHER INFORMATION ON THE CONSOLIDATED INCOME STATEMENT
(17) Personnel Expenses
Personnel expenses break down as follows:
in EUR k 2018 2017
Wages and salaries 348,401 328,646
Social security and other benefit costs 60,662 58,881
Pension costs 2,118 5,150
Personnel expenses 411,181 392,677
The Gerresheimer Group had an average of 9,887 employees in the financial
year 2018 (prior year: 9,791), comprising 2,424 white-collar employees
(prior year: 2,260), 7,251 blue-collar employees (prior year: 7,308) and
212 trainees (prior year: 223).
134 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
NOTES TO THE CONSOLIDATED BALANCE SHEET
(18) Intangible Assets
Intangible Assets break down as follows:
in EUR k Goodwill
Customer relationship, brand
names, technologies and similar assets
Development costs Other
Intangible assets
As of November 30, 2018
Prior year carrying amount 656,783 418,141 6,460 19,845 1,101,229
Change in the consolidated group 5,014 398,431 21,875 – 425,320
Currency translation 8,790 13,302 -6 -2 22,084
Additions – – 1,264 3,948 5,212
Disposals – – – 24 24
Reclassifications – – -3,424 79 -3,345
Amortization – 40,607 1,042 3,148 44,797
Carrying amount 670,587 789,267 25,127 20,698 1,505,679
Cost 674,437 1,064,735 30,933 47,623 1,817,728
Accumulated amortization and impairment losses 3,850 275,468 5,806 26,925 312,049
Carrying amount 670,587 789,267 25,127 20,698 1,505,679
As of November 30, 2017
Prior year carrying amount 687,750 497,069 3,248 5,835 1,193,902
Currency translation -30,967 -45,388 10 -65 -76,410
Additions – – 3,632 16,023 19,655
Disposals – – – 4 4
Reclassifications – – -82 120 38
Amortization – 33,540 348 2,064 35,952
Carrying amount 656,783 418,141 6,460 19,845 1,101,229
Cost 660,633 649,414 16,252 45,343 1,371,642
Accumulated amortization and impairment losses 3,850 231,273 9,792 25,498 270,413
Carrying amount 656,783 418,141 6,460 19,845 1,101,229
Significant intangible assets result from business combinations. Amortization
of intangible assets is mainly disclosed in the functional area selling expenses.
While brand names—with the exception of two companies—have indefinite
useful lives, the remaining identifiable assets will be fully amortized by 2035
at maximum.
135CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Goodwill is assigned to the six (prior year: five) cash-generating units as
follows:
in EUR k
Nov. 30, 2018
Nov. 30, 2017
Plastics & Devices
Plastic Packaging 87,882 91,365
Medical Systems 115,468 115,468
Centor 271,517 260,289
Primary Packaging Glass
Converting 64,386 63,341
Moulded Glass 126,320 126,320
Advanced Technologies
Sensile Medical 5,014 –
Goodwill 670,587 656,783
The impairment test on goodwill was carried out in all cash-generating units
in accordance with the budget prepared on the basis of historical perfor-
mance and current market expectations and adopted by the Management
Board for the years 2019 to 2023 (prior year: 2018 to 2022).
The growth rate used to extrapolate for subsequent years was 1.0%.
Gerresheimer determines the recoverable amount as value in use, using
cash flow projections budgeted for the years 2019 to 2023. Future cash
flows are discounted using the weighted average cost of capital (WACC). To
determine the cost of equity the beta factor was derived on the basis of a
peer group. Borrowing costs were determined from an analysis of the credit
facilities in use. A sensitivity analysis was performed to show the effects on
goodwill of a potential increase to the WACC. The WACC before tax was
determined iteratively from the WACC after tax and breaks down as follows
for the cash-generating units:
in % 2018 2017
Plastics & Devices
Plastic Packaging 6.0 6.2
Medical Systems 6.7 6.8
Centor 5.1 5.7
Primary Packaging Glass
Converting 6.0 6.1
Moulded Glass 6.3 6.3
Advanced Technologies
Sensile Medical 4.8 –
As in the prior year, goodwill impairment testing did not indicate any
impairment. The change in book values of each of the cash-generating
units results besides the addition in the amount of EUR 5,014k arising from
the acquisition of Sensile Medical merely from currency effects.
For each of the cash-generating units, management is of the opinion that
no reasonably possible change in the key assumptions used to determine
the value in use would cause the carrying amount of the cash-generating
unit to exceed its recoverable amount.
Brand names existing as of November 30, 2018 are allocated to the Plastics &
Devices Division in the amount of EUR 24,676k (prior year: EUR 25,228k) and
to the Advanced Technologies Division in the amount of EUR 3,374k (prior
year: EUR 0k). Brand names—with the exception of two companies—have an
indefinite useful life and are not amortized. Brand names with an indefinite
useful life are recorded with an amount of EUR 21,358k as of November 30,
2018 (prior year: EUR 21,858k) and are fully attributable to the Plastics &
Devices Division. The change in book values for brand names with an indefinite
useful life results merely from currency effects.
EUR 2,919k (prior year: EUR 3,508k) was spent on research and development
in the financial year 2018. The Group has recognized development costs in
the amount of EUR 1,264k (prior year: EUR 3,632k).
The position “Other” mainly includes licenses, primarily related to an exclusive
license for an integrated, passive syringe safety solution and the new Gx® RTF
vials product portfolio of prefillable sterile injection vials, together with techno-
logical know-how, standard software applications and prepayments on
intangible assets.
136 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
(19) Property, Plant and Equipment and Investment Property
Property, plant and equipment and investment property break down as
follows:
in EUR k
Land, land rights and
buildings (used for operating
purposes)Plant and
machineryOther equipment
and machinery
Payments on account and assets under construction
Property, plant and
equipmentInvestment
property
As of November 30, 2018
Prior-year carrying amount 174,425 316,519 26,389 85,244 602,577 5,732
Change in the consolidated group – – 689 – 689 –
Currency translation -749 -1,335 -278 -423 -2,785 –
Additions 2,281 20,157 5,146 81,917 109,501 –
Disposals 20 393 78 37 528 –
Reclassifications 2,855 53,455 2,604 -55,376 3,538 -166
Depreciation 8,342 73,884 8,173 20 90,419 –
Impairment losses 9 1,654 182 – 1,845 –
Change in non-current assets and disposal groups held for sale – – – – – -955
Carrying amount 170,441 312,865 26,117 111,305 620,728 4,611
Cost 252,724 813,630 91,064 111,421 1,268,839 5,335
Accumulated depreciation and impairment losses 82,283 500,765 64,947 116 648,111 724
Carrying amount 170,441 312,865 26,117 111,305 620,728 4,611
As of November 30, 2017
Prior-year carrying amount 180,025 332,902 27,480 69,762 610,169 5,732
Currency translation -2,202 -10,328 -532 -2,847 -15,909 –
Additions 3,109 27,211 4,812 63,778 98,910 –
Disposals 338 578 48 692 1,656 –
Reclassifications 2,348 40,144 2,227 -44,757 -38 –
Depreciation 8,489 72,823 7,550 – 88,862 –
Impairment losses 28 9 – – 37 –
Carrying amount 174,425 316,519 26,389 85,244 602,577 5,732
Cost 246,194 752,068 85,430 85,341 1,169,033 6,714
Accumulated depreciation and impairment losses 71,769 435,549 59,041 97 566,457 982
Carrying amount 174,425 316,519 26,389 85,244 602,577 5,732
Property, plant and equipment include leased assets in the amount of
EUR 8,086k (prior year: EUR 8,503k). As of the end of the reporting period,
these comprised plant, warehouse and office land and buildings in the
amount of EUR 6,082k (prior year: EUR 6,378k), technical equipment and
machinery in the amount of EUR 1,859k (prior year: EUR 1,942k) and other
property, plant and equipment in the amount of EUR 145k (prior year:
EUR 183k).
137CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Land and buildings owned by the Group with a book value of EUR 1,610k as
of November 30, 2018 (prior year: EUR 1,994k) were provided as collateral
for the case in which the prior owners of the Group company concerned are
not able to comply with their liabilities to the tax authorities. With regard
to the collateral provided, there is a full right of recourse to the principle
debtor and thus there is no risk for the Gerresheimer Group to be enlisted
from these collaterals.
Land not used for operating purposes and classified as investment property
in accordance with IAS 40 “Investment property” is leasehold land with a
carrying amount of EUR 2,062k (prior year: EUR 2,062k) and a fair value of
EUR 4,080k (prior year: EUR 4,080k) and non-operating land. The fair value
of leasehold land is determined from various sources of information, which
include past sales, officially published indicative land values and independent
appraisals. The fair values of other non-operating land are the same as the
carrying amounts.
Rental income from investment properties amounts to EUR 28k in the
financial year 2018 (prior year: EUR 44k). Expenses of EUR 18k were incurred
(prior year: EUR 41k) that are entirely attributable to investment property,
which generated rental income during the period.
A property owned by our company in Kuessnacht (Switzerland) with a
carrying amount value of EUR 955k as of November 30, 2018, is reported
in the consolidated balance sheet as a non-current asset held for sale. At
the current time, we assume that this property will be sold within the next
twelve months following the closure of the site.
Of the impairment losses, 96.5% (prior year: 100.0%) relate to the Plastics &
Devices Division and 3.5% (prior year: 0.0%) to the Primary Packaging Glass
Division. Impairment losses are mainly related to the inhaler customer, who
ceased to place orders with our plant in Kuessnacht (Switzerland) because
his inhaler business fell short of his expectations.
(20) Investments Accounted for Using the Equity Method
The table below shows a summary of aggregated financial information on
individually immaterial companies that are accounted for using the equity
method. The companies included here are Gerresheimer Tooling LLC,
Peachtree City (Georgia/USA) and PROFORM CNC Nastrojarna spol. s r.o.,
Horsovsky Tyn (Czech Republic):
in EUR k
Nov. 30, 2018
Nov. 30, 2017
Assets 2,827 1,601
Equity 971 1,035
Liabilities 1,856 566
Revenues 2,825 2,808
Profit or loss 307 326
Investments accounted for using the equity method have developed as
follows:
in EUR k
Investments accounted
for using the equity
method
As of November 30, 2018
Prior-year carrying amount 252
Currency translation 11
Share of profit or loss of associated companies 34
Carrying amount 297
As of November 30, 2017
Prior-year carrying amount 262
Distributions -78
Currency translation -25
Share of profit or loss of associated companies 93
Carrying amount 252
138 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
(21) Financial Assets
Financial assets break down as follows:
Nov. 30, 2018 Nov. 30, 2017
in EUR k TotalThereof: Current
Thereof: Non-
current TotalThereof: Current
Thereof: Non-
current
Fair value of derivative financial instruments 204 204 – 1,037 1,037 –
Investments 400 – 400 228 – 228
Refund claims for pension benefits 3,474 251 3,223 3,762 304 3,458
Refund claims from third parties 10,204 10,204 – 8,546 8,546 –
Other loans 1,630 1,570 60 1,430 39 1,391
Other 5,796 5,796 – 7,094 7,094 –
Other financial assets 21,708 18,025 3,683 22,097 17,020 5,077
Trade receivables 273,531 273,531 – 242,684 242,684 –
Cash and cash equivalents 80,570 80,570 – 287,036 287,036 –
Financial assets 375,809 372,126 3,683 551,817 546,740 5,077
The position “Other” includes mainly bills of exchange and receivables for
reimbursement agreements.
At the reporting date, as well as in the prior year, other financial assets that
are neither past due nor impaired are recoverable in full and none of the
unimpaired financial assets were overdue.
Due to the planned acquisition of property in Switzerland in the financial
year 2019, the tenant loan shown in non-current other loans in the prior
year, which can be offset against the purchase price, is included in full in
current other loans as of November 30, 2018 in the amount of EUR 1,537k.
In the financial year, and in the prior year, no impairment losses were
recognized on investments.
The carrying amount of financial assets in the consolidated financial
statements represents the maximum exposure to credit risk for the Group
as a whole. Approximately 24% of trade receivables were covered by credit
insurance in the financial year 2018 (prior year: approximately 25%).
The trade receivables include EUR 55,611k (prior year: EUR 24,843k) amounts
due from customers for contract work.
For further details on the fair values of derivative financial instruments,
please see the information provided in Note (34).
139CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
(22) Other Receivables
Other receivables break down as follows:
Nov. 30, 2018 Nov. 30, 2017
in EUR k TotalThereof: Current
Thereof: Non-
current TotalThereof: Current
Thereof: Non-
current
Other tax receivables 13,920 13,022 898 9,575 8,684 891
Prepaid assets 5,587 4,634 953 3,256 3,220 36
Other assets 5,189 4,169 1,020 6,351 5,684 667
Other receivables 24,696 21,825 2,871 19,182 17,588 1,594
The increase in other tax receivables mainly relates to higher value added
tax refund claims resulting from various investment projects at the end of
the financial year 2018.
The prepaid assets mainly consist of accrued payments made prior to the
reporting date for maintenance, tax, personnel and insurance expenses in
the next financial year as well as payments made in connection with the
extension of a supply agreement with a major customer.
(23) Deferred Taxes
Deferred tax assets break down as follows:
Nov. 30, 2018 Nov. 30, 2017
in EUR k
Realization expected
within 12 months
Realization expected
after 12 months
Realization expected
within 12 months
Realization expected
after 12 months
Tax benefits
Tax loss carryforwards 10,161 11,709 268 9,972
10,161 11,709 268 9,972
Temporary differences
Non-current assets 771 2,069 481 2,783
Inventories 709 – 999 –
Receivables and other assets 138 – 209 –
Provisions for pensions 664 20,862 805 25,211
Other provisions 5,214 1,795 6,899 1,034
Payables and other liabilities 1,853 1,398 2,283 1,535
Cash flow hedge – 2 – 2
9,349 26,126 11,676 30,565
19,510 37,835 11,944 40,537
Offset -37,850 -41,451
Deferred tax assets 19,495 11,030
140 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Write-downs of inventories totaling EUR 3,978k (prior year: EUR 7,541k) were
recognized as an expense in the financial year. When the circumstances that
caused a write-down no longer exist, the write-down is reversed. Reversals of
write-downs amounted to EUR 264k (prior year: EUR 839k) in the financial
year. These are mainly attributable to the increase of the net realizable value
of finished goods and mechandise written down in prior periods.
For further details on the cost of inventories recognized as an expense
during the financial year, please see the information provided in Note (9).
As in the prior year, no inventories were pledged as security for liabilities
as of November 30, 2018.
Deferred tax liabilities break down as follows:
Nov. 30, 2018 Nov. 30, 2017
in EUR k
Realization expected
within 12 months
Realization expected
after 12 months
Realization expected
within 12 months
Realization expected
after 12 months
Temporary differences
Non-current assets 8,971 188,781 7,378 170,459
Inventories 2,222 82 2,906 87
Receivables and other assets 2,481 680 1,433 717
Other provisions and liabilities 1,740 755 1,120 890
15,414 190,298 12,837 172,153
Offset -37,850 -41,451
Deferred tax liabilities 167,862 143,539
Deferred tax assets and liabilities are offset by company or tax group if, and
only if, the deferred tax assets and deferred tax liabilities relate to income
taxes levied by the same taxation authority and Gerresheimer has a legally
enforceable right to set off current tax assets against current tax liabilities.
(24) Inventories
Inventories break down as follows:
in EUR k
Nov. 30, 2018
Nov. 30, 2017
Raw materials, consumables and supplies 52,944 49,921
Work in progress 16,078 14,993
Finished goods and merchandise 97,749 81,381
Prepayments made 4,719 2,067
Inventories 171,490 148,362
141CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
(25) Trade Receivables
Trade receivables break down as follows:
in EUR k
Nov. 30, 2018
Nov. 30, 2017
Trade receivables 275,446 244,541
Less bad debt allowances 1,915 1,857
Net trade receivables 273,531 242,684
The above-mentioned trade receivables include amounts due from customers
from construction contracts:
in EUR k
Nov. 30, 2018
Nov. 30, 2017
Costs incurred and recognized profits 118,611 84,636
Less progress billing 63,000 60,408
Net amount due from customers for contract work 55,611 24,228
Thereof: Amounts due from customers for contract work 55,611 24,843
Thereof: Amounts due to customers for contract work (other liabilities) – 615
Bad debt allowances are recognized for doubtful receivables. Gerresheimer
determines the appropriateness of the bad debt allowances recognized for
doubtful receivables on the basis of the age structure of receivables, past
experience with regard to the derecognition of receivables, customer credit
ratings and changes in payment behavior.
As of the balance sheet date, the age structure of unimpaired trade receivables
breaks down as follows:
in EUR k
Nov. 30, 2018
Nov. 30, 2017
Carrying amount 273,531 242,684
General bad debt allowances 884 962
Specific bad debt allowances 1,031 895
Gross carrying amount of receivables for which specific bad debt allowances were recognized -1,096 -972
Trade receivables not impaired 274,350 243,569
Thereof as of the balance sheet date
not past due 252,392 227,581
past due by up to 30 days 14,437 8,635
past due by 31 to 60 days 2,477 2,471
past due by 61 to 90 days 2,048 2,340
past due by 91 to 120 days 910 1,249
past due by more than 120 days 2,086 1,293
274,350 243,569
The gross carrying amount of trade receivables individually determined to be
impaired is EUR 1,096k (prior year: EUR 972k). The corresponding bad debt
allowance is EUR 1,031k (prior year: EUR 895k). The net carrying amount
of trade receivables individually determined to be impaired is therefore
EUR 65k (prior year: EUR 77k).
Bad debt allowances developed as follows:
in EUR k 2018 2017
As of December 1 1,857 2,155
Additions 531 335
Utilizations -120 -128
Reversals -288 -393
Currency translation -65 -112
As of November 30 1,915 1,857
(26) Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits
not subject to risk of changes in value.
(27) Equity and Non-controlling Interests
As of November 30, 2018, subscribed capital remains unchanged at
EUR 31,400k, and the capital reserve amounts to EUR 513,827k. Thus, the
amounts are unchanged from the balance sheet date of the prior year. The
capital reserve contains share premiums from the IPO in the year 2007 and
cash contributions from shareholders in the years 2004 and 2007.
The number of shares outstanding at the reporting date is 31,400,000 each
with a nominal value of EUR 1.00. In the current financial year, a dividend
of EUR 34,540k was paid out for the financial year 2017. This corresponds
to a dividend of EUR 1.10 per no-par-value share.
142 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Proposal for appropriation of retained earnings
The Management Board and the Supervisory Board will propose to the
Annual General Meeting on June 6, 2019 to distribute a dividend of EUR 1.15
per share for the financial year 2018 (prior year: EUR 1.10 per share). This
corresponds to a dividend payment of EUR 36,110k, which is an increase
of 4.5% compared to the prior-year dividend payment. The dividend ratio
amounts to 20.3% (prior year: 27.1%) of adjusted net income after non-con-
trolling interests of EUR 177,998k (prior year: EUR 127,459k). The distribution
is in line with our dividend policy of distributing between 20% and 30%
of adjusted net income after non-controlling interests to shareholders,
according to our operating performance. We have opted for a dividend
payment at the lower end of our dividend policy following the successful
completion of the acquisition of Sensile Medical in the current financial year,
which will increase the adjusted EBITDA leverage temporarily to over 3.0x.
Furthermore, it will be proposed that the residual retained earnings of the
Company of EUR 149,777k should be carried forward to new account. As
a result, Gerresheimer shareholders benefit from the business success of
the Gerresheimer Group.
in EUR 2018 2017
Retained earnings before dividend payment 185,886,668.78 152,607,004.84
Dividend payment 36,110,000.00 34,540,000.00
Carryforward to new account 149,776,668.78 118,067,004.84
(28) Provisions for Pensions and Similar Obligations
While the Gerresheimer Group has pension plans in various countries, pension
plans in Germany and pension and health plans (health insurance for retired
employees) in the USA account for 91.3% of the Gerresheimer Group’s total
provisions for pensions and similar obligations.
Subject to individual exceptions, no new employees are accepted into the
German defined benefit plans. The German plans are in the process of
being wound down, with their pension obligations decreasing over time.
Pension awards are generally based on an employee’s length of service,
pay and position. Pension entitlements are thus acquired for each year of
service according to salary. Pension awards for members of the Management
Board that were appointed before February 10, 2015 and therefore receive
defined benefit plans for retirement cover are generally handled through a
pension fund or provident fund. If the fund assets are insufficient when the
pension starts, supplementary contributions are called in. Further details on
the Management Board pension plans are provided in the Remuneration
Report section of the Group Management Report.
The US defined benefit plans have been closed and the benefits vested.
These plans are funded by investments (plan assets). The plans are financed
from annual contribution payments. To limit exposure to capital market and
demographic risk for the Gerresheimer Group, all new US pension plans are
defined contribution plans.
Retired employees domiciled in the USA also receive subsidized healthcare.
Under these plans, retirees are refunded a certain percentage of eligible
healthcare expenditure. The healthcare plans in the USA have been closed
and the benefits vested. This has limited the risk of continuously increasing
refund claims for the Gerresheimer Group. Changes in the legal framework
can cause changes to pension and health plans.
143CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Provisions for pensions developed as follows:
in EUR k 2018 2017
As of December 1 158,684 173,211
Utilizations -11,857 -12,262
Additions 3,142 6,414
Change in the consolidated group 9,520 –
Impact of revaluation -5,362 -4,990
Currency translation 1,399 -3,678
Changes in plan surplus recognized in other assets – -11
As of November 30 155,526 158,684
Thereof: Current 13,943 13,580
Provisions of EUR 116,953k (prior year: EUR 126,813k) were recognized in
connection with various pension plans and individual agreements entered
into by German Group companies; an amount of EUR 38,573k (prior year:
EUR 32,501k) relates to foreign subsidiaries, in particular US Group entities.
The provision also includes the obligations of US Group companies to assume
the medical expenses of retired employees.
The benefits are mainly financed through the systematic accumulation of
pension provisions at the entities concerned. External funds that meet the
definition of plan assets exist both domestically and internationally.
The following assumptions were made when determining the pension
provision and plan assets:
Domestic International
in %
Nov. 30, 2018
Nov. 30, 2017
Nov. 30, 2018
Nov. 30, 2017
Discount rate 1.58 1.45 1.06 – 8.19 0.80 – 7.15
Increase in salaries 3.25 3.25 0.62 – 6.63 0.50 – 6.55
Increase in pensions 1.00 1.00 – –
Increase in medical costs – – 5.00 – 5.67 5.00 – 6.00
The discount rate is based on the yield on high-quality corporate bonds. The
Prof. Dr. Heubeck RT 2018 G mortality tables were used as the reference
basis with regard to mortality for the determination of domestic pension
obligations. For foreign Group companies, current country-specific mortality
assumptions were used. The projected income trends reflect expected rates
of increase in salaries and income.
The present value of the defined benefit obligation breaks down as follows:
in EUR k
Nov. 30, 2018
Nov. 30, 2017
As of December 1 210,495 227,556
Current service cost 2,530 2,847
Interest expense 4,008 4,188
Employee contributions 714 533
Benefit payments -17,518 -15,196
Actuarial gains/losses -7,073 -2,298
Financial assumptions -6,777 -711
Demographic assumptions 341 -181
Experience assumptions -637 -1,406
Past service cost -2,319 –
Change in the consolidated group 27,077 –
Administration costs 361 431
Settlement -1,145 -18
Currency translation and other changes 3,160 -7,548
As of November 30 220,290 210,495
144 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Changes in plan assets are as follows:
in EUR k
Nov. 30, 2018
Nov. 30, 2017
As of December 1 51,811 54,356
Interest income on plan assets 1,238 1,145
Actual return on plan assets, excluding interest income on plan assets -1,711 2,692
Employee contributions 714 533
Employer contributions 1,557 1,409
Benefit payments -7,218 -4,454
Change in the consolidated group 17,557 –
Settlement -945 –
Currency translation and other changes 1,761 -3,870
As of November 30 64,764 51,811
The composition of the plan assets used to cover the defined benefit
obligation breaks down as follows as of the balance sheet date:
Domestic International
in EUR k
Nov. 30, 2018
Nov. 30, 2017
Nov. 30, 2018
Nov. 30, 2017
Plan assets with quoted market price 5,029 5,111 42,302 26,343
Shares (held directly) 890 2,230 13,837 11,817
Fixed-interest securities 4,106 2,848 18,013 10,160
Liquidity 33 33 2,555 1,806
Insurance contracts – – 2 50
Real estate – – 4,397 –
Other – – 3,498 2,510
Plan assets with non-quoted market price 6,215 5,870 11,218 14,487
Insurance contracts 6,139 5,791 11,218 14,487
Other 76 79 – –
Plan assets 11,244 10,981 53,520 40,830
The expected contributions to plan assets in the next financial year are
estimated at EUR 1,427k. Contributions are mainly paid by the employer.
The main pension funds relate to the pension plans in Switzerland
(EUR 30,488k), the USA (EUR 22,622k) and Germany (EUR 11,244k). Their
investment policy, besides complying with regulatory requirements, is geared
to the risk structure within the defined benefit obligation. Two different
pension plans exist in Switzerland. On the one hand a full insurance policy
has been taken out to cover the insurance and investment risk. Contributions
to financing of the pension fund in this instance are made in equal amounts
by the employees and the employer. Based on the fund’s investment policy,
Gerresheimer expects a return on capital ensuring long-term fulfillment of
obligations to be generated. On the other hand Gerresheimer funds another
staff pension plan that is only partially financed. Residual risks from asset
allocation and longevity remain with Gerresheimer.
Pension expenses included in the consolidated income statement are
calculated as follows:
in EUR k 2018 2017
Current service cost 2,530 2,847
Past service cost -2,319 –
Settlement -200 93
Service cost 11 2,940
Interest expense 4,008 4,188
Interest income on plan assets -1,238 -1,145
Net interest expense 2,770 3,043
Administration costs 361 431
3,142 6,414
Thereof: Expense for pension benefits for which there are reimbursement rights 66 64
145CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
With the exception of net interest, all expenses and income are recognized
on a net basis in personnel expenses, which is included in functional cost.
Net interest expense is shown in the net finance expense.
For one pension obligation in Germany, there is a contractual refund claim for
pension payments against a third party. This refund claim does not conform
to the definition of plan assets and therefore cannot be accounted for net of
the pension obligations. The refund claim for pension benefits is included in
other financial assets. Please see Note (21).
The Gerresheimer Group expects benefit payments in future years as follows:
in EUR k 2019 2020 2021 2022
Expected benefit payments 13,944 13,574 12,954 12,705
The weighted average duration of the defined benefit obligation is between
11.8 years in Germany and between 5.7 and 15.5 years internationally.
The main actuarial assumptions used in the measurement of defined benefit
obligations are the discount rate and the expected salary trend. The pension
provision also includes the partial obligations of US Group companies to
assume the medical costs of retired employees. The obligation was deter-
mined assuming a cost inflation rate of 5.7% (prior year: 6.0%) falling
incrementally to 5.0% by 2021. The sensitivity analyses in the following
show how the amount of the defined benefit obligation would have been
affected by possible changes in the relevant assumptions. The calculations
assume otherwise unchanged assumptions:
in EUR k
Effect on present value of defined benefit obligation
2018 2017
Increase in discount rate by 0.5 percentage points -12,495 -12,056
Decrease in discount rate by 0.5 percentage points 13,906 13,475
Increase in salaries by 0.25 percentage points 768 473
Decrease in salaries by 0.25 percentage points -775 -453
Increase in medical costs by 1.0 percentage points 1,351 1,706
Decrease in medical costs by 1.0 percentage points -1,235 -1,584
Various interdependencies exist between the above actuarial assumptions.
The sensitivity analyses do not take such interdependencies into account.
Expenses for defined contribution plans amount to EUR 1,403k (prior year:
EUR 1,562k) in the financial year, mainly at US Group companies.
EUR 13,314k (prior year: EUR 12,610k) in statutory pension insurance
contributions were paid in Germany.
146 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
(29) Long-term Share-price-based Variable Remuneration
(phantom stocks)
The Company has agreed long-term share-price-based variable remunera-
tion with all members of the Management Board. Under the agreements,
members are granted a specific number of stock appreciation rights (phan-
tom stocks), according to the share price, for each year of service on the
Management Board. Each stock appreciation right entitles the holder to
a payment based on the change in the share price of Gerresheimer AG,
subject to a performance threshold: At the exercise date, the Company’s
share price must exceed the initial price for the relevant tranche by at least
12% or have increased by a larger percentage than the MDAX. For stock
appreciation rights relating to 2018, the initial price is the EUR 67.42 issue
price. The performance threshold is relevant to vesting but not to determi-
nation of the payment amount. Stock appreciation rights can be exercised
during a 16-months exercise period following a four-year waiting period.
The payment amount is equal to the absolute increase in the share price
between the issue date of the stock appreciation rights and the exercise
date. However, the payment amount is capped at 25% of the initial price
of all stock appreciation rights in the same tranche. All unexercised stock
appreciation rights expire on departure of the holder, except in the event
of death or permanent incapacity, or if the holder has not been a member
of the Management Board for at least one full year of the term of each
tranche. All entitlements to future stock appreciation rights likewise expire on
departure. The Company reserves the right to settle stock appreciation rights
with shares; however, cash settlement is planned. These statements only
concern tranche 9 for Mr. Beaujean and tranches 9 and 10 for Mr. Schütte.
Since approval of the remuneration system at the Annual General Meeting
on April 30, 2015, when extending the contracts of existing Management
Board members or appointing new Management Board members, a new
agreement applies under which each Management Board member receives a
value-based allocation. The commitment to the Members of the Management
Board thus no longer includes a specific number of stock appreciation rights
but an entitlement (in a specific amount) to a payment in the event that
the exercise and payment conditions are met. After a vesting period of five
years, a Management Board member is entitled, within an ensuing period
of 24 months, to demand payment in the amount of the appreciation
in the stock market price of Gerresheimer stock between the issue date
and the exercise (maturity) date. Payment is conditional on the percentage
appreciation being at least 20% or being greater than the percentage in-
crease in the MDAX over the maturity period and on at least one full year’s
membership of the Management Board within the maturity period. The
target-based remuneration is to be 40% of the individual fixed salary for
each member of the Management Board on attainment of an exercise target
comprising a 20% increase in the share price. If the share price rises during
the set period by 40% or more, the entitlement awarded to the members
of the Management Board is capped at 80% of their individual fixed salary.
The fair value of the phantom stocks is determined using a recognized
(binomial) option pricing model. The volatility of the target value is assumed
as 25.5% p.a. (prior year: 18.0% p.a.) and the turnover rate within the
Management Board as 3.5% p.a. (prior year: 3.0% p.a.). The yield on German
government bonds of matching maturities was used as the risk-free interest
rate. Additionally, the following assumptions were made for the fair value
valuation:
147CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Members of the Management Board
Tranche 9 old(2015)
Tranche 9 (2015)
Tranche 10 old (2016)
Tranche 10 (2016)
Tranche 11 (2017)
Tranche 12 (2018)
Grant dateJune 24, 2011/
October 23, 2012 May 22, 2014 June 24, 2011May 22, 2014/
February 9, 2015
May 22, 2014/ February 9, 2015/
April 25, 2016
February 9, 2015/ April 25, 2016/
January 1, 2018
Term of tranche October 31, 2020 June 16, 2022 October 31, 2021 June 10, 2023 June 9, 2024 June 11, 2025
End of the vesting period June 16, 2019 June 16, 2020 June 10, 2020 June 10, 2021 June 9, 2022 June 11, 2023
Issue price (in EUR) 51.89 51.89 68.87 68.87 74.61 67.42
Target price (in EUR) 58.12 62.27 77.13 82.64 89.53 80.90
Maximum target price (in EUR) 64.86 72.65 86.09 96.42 104.45 94.39
Number of stock appreciation rights issued 105,000 Entitlement 50,000 Entitlement Entitlement Entitlement
Exercise threshold (in %) 12 20 12 20 20 20
Fair value (in EUR k) 949 616 260 773 1,035 1,055
Maximum pay-out amount (in EUR k) 1,362 616 861 1,120 1,624 1,512
In the course of the departure of the two Management Board members
Mr. Beaujean (as of April 30, 2019) and Mr. Schütte (as of February 28,
2019), we adjusted the vesting period for the claims under the phantom
stocks program to the date of their departure.
Based on the above assumptions, the fair value of the 2019 to 2021 tranches
(tranches 13 to 15) is EUR 2,238k as of the balance sheet date.
The phantom stocks developed as follows:
Members of the Management Board
Tranche 8 old (2014)
Tranche 9 old (2015)
Tranche 10 old(2016)
As of November 30, 2013 – – –
Allocated 185,000 – –
Exercised – – –
Expired during the period – – –
As of November 30, 2014 185,000 – –
Allocated – 105,000 –
Exercised – – –
Expired during the period – – –
As of November 30, 2015 185,000 105,000 –
Allocated – – 50,000
Exercised – – –
Expired during the period – – –
As of November 30, 2016 185,000 105,000 50,000
Allocated – – –
Exercised – – –
Expired during the period – – –
As of November 30, 2017 185,000 105,000 50,000
Allocated – – –
Exercised 185,000 – –
Expired during the period – – –
As of November 30, 2018 – 105,000 50,000
In the current financial year, an amount of EUR 2,259k was paid for tranche 8.
The provision for the phantom stock program amounted to EUR 4,312k as
of the reporting date (prior year: EUR 4,296k). The expenses amounted to
EUR 2,563k for the financial year 2018 (prior year: EUR 1,781k).
148 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
(30) Other Provisions
Other provisions developed as follows:
in EUR k
As of Dec. 1, 2017
Change in the
consolidated group
Reclassifi - ca tions Utilizations Reversals Additions
Currency translation
As of Nov. 30,
2018Thereof: Current
Thereof: Non-current
Tax provisions 3,081 44 – 354 710 1,734 9 3,804 3,804 –
Personnel obligations 19,837 – – 6,752 1,760 7,702 218 19,245 11,508 7,737
Warranties 9,608 – -342 3,458 2,853 5,506 41 8,502 8,378 124
Sales bonuses, rebates and discounts 3,227 – 393 1,821 685 3,486 -42 4,558 4,316 242
Restructuring provisions 4,387 – – 1,033 485 10,622 131 13,622 11,130 2,492
Other 5,264 689 -51 1,638 197 2,135 -37 6,165 5,815 350
Other provisions 45,404 733 – 15,056 6,690 31,185 320 55,896 44,951 10,945
in EUR k
As of Dec. 1, 2016
Change in the
consolidated group
Reclassifi - ca tions Utilizations Reversals Additions
Currency translation
As of Nov. 30,
2017Thereof: Current
Thereof: Non-current
Tax provisions 1,491 – – 447 100 2,195 -58 3,081 3,081 –
Personnel obligations 21,194 – – 8,481 593 8,446 -729 19,837 13,150 6,687
Warranties 19,987 – – 7,309 6,545 3,740 -265 9,608 9,608 –
Sales bonuses, rebates and discounts 3,775 – – 2,101 360 1,959 -46 3,227 3,227 –
Restructuring provisions 3,730 – 94 1,638 481 2,934 -252 4,387 1,770 2,617
Other 11,197 – -94 5,858 1,858 2,225 -348 5,264 4,378 886
Other provisions 61,374 – – 25,834 9,937 21,499 -1,698 45,404 35,214 10,190
Provisions for personnel obligations notably include obligations relating
to the phantom stocks program, a group health insurance program at the
US Group companies as well as long-service awards and partial retirement
agreements.
Provisions for warranties are recorded on the basis of legal or contractual
obligations and refer to product related warranty commitments. The amount
of provisions recorded is based on management’s best estimate. This estimate
was done on the basis of past experience and warranty data of similar
products. It can fluctuate due to changed production processes as well as
due to other parameters influencing the product’s quality.
Provisions for sales bonuses, rebates and discounts relate to unpaid com-
pensations granted on revenues realized prior to the balance sheet date.
149CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Restructuring provisions basically refer to three main issues. On the one
hand it includes future payments in connection with the shut down of our
plant in Kuessnacht (Switzerland). On the other hand management has
decided—within the operational and strategic planning—for adjustments
of employee capacities by means of re-organization of the Plastics & Devices
Division, which is equally reflected in this provision. Moreover, this item
comprises a provision for the shut down of a plant in the Primary Packaging
Glass Division, which had already been decided and communicated in the
prior year. The restructuring provisions of EUR 13,622k at the financial year-
end (prior year: EUR 4,387k) are based on detailed formal plans.
Two arbitration proceedings were pending at the subsidiaries Gerresheimer
Group GmbH, Duesseldorf (Germany), and GERRESHEIMER GLAS GmbH,
Duesseldorf (Germany), which were decided legally binding in the financial
year 2017. Since these arbitration proceeds are not yet fully completed,
expected expenses and payments for these proceedings are considered as
part of the position “Other” within the provisions.
Moreover, the position “Other” also includes expected expenses for a large
number of items, which are not significant on an individual basis.
The column “Change in the consolidated group” comprises additions to
provisions as a result of the first time consolidation of Sensile Medical.
Interest expenses relating to the compounding of long-term accruals amount
to EUR 153k (prior year: EUR 144k).
Outflows of economic benefits in relation to provisions are expected in
the amount of EUR 44,951k (prior year: EUR 35,214k) within one year,
EUR 10,945k (prior year: EUR 10,190k) between two and five years and
EUR 0k (prior year: EUR 0k) after more than five years.
(31) Financial Liabilities
Financial liabilities break down as follows:
Nov. 30, 2018 Nov. 30, 2017
in EUR k TotalThereof: Current
Thereof: Non-current Total
Thereof: Current
Thereof: Non-current
Promissory loans 674,046 – 674,046 673,798 – 673,798
Bond – – – 299,687 299,687 –
Liabilities to banks 283,270 283,270 – 15,870 15,813 57
unsecured 283,270 283,270 – 15,870 15,813 57
Fair Value of derivative financial instruments 1,346 1,346 – 372 372 –
Other 182,438 105,067 77,371 29,244 21,795 7,449
Other financial liabilities 1,141,100 389,683 751,417 1,018,971 337,667 681,304
Trade payables 207,402 207,282 120 176,303 176,303 –
Financial liabilities 1,348,502 596,965 751,537 1,195,274 513,970 681,304
The carrying amounts of the positon “Other” and the trade payables rep-
resent appropriate approximations of their fair values.
For further details of derivative financial instruments, please see Note (34).
The following table shows maturities, interest rates and fair values for
promissory loans, the issued bond repaid as planned and in full on May 21,
2018 and liabilities to banks:
150 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
November 30, 2018
Currency in k Currency Amount Due byInterest rate
% p.a.Carrying
amount (EUR)Fair Value
(EUR)
Promissory loans EUR 169,500 20201) 0.98 169,500 169,500
EUR 20,000 20201) 0.752) 20,000 20,000
EUR 160,000 20221) 1.44 160,000 160,000
EUR 50,000 20221) 0.952) 50,000 50,000
EUR 25,500 20251) 2.04 25,500 25,500
EUR 90,000 20221) 0.82 90,000 90,000
EUR 5,500 20221) 0.602) 5,500 5,500
EUR 104,500 20241) 1.25 104,500 104,500
EUR 4,500 20241) 0.752) 4,500 4,500
EUR 45,500 20271) 1.72 45,500 45,500
Capitalized feesEUR -954 2020 – 20271) 0.60 – 2.04 -954 -954
674,046 674,046
Liabilities to banksUSD 214,346 2019 3.64 – 7.004) 188,701 188,701
PLN 53,274 2019 1.98 – 2.294) 12,418 12,418
EUR 80,164 2019 0.20 – 1.302) 80,164 80,164
ARS 2,081 2019 22.50 – 30.00 49 49
INR 229,307 – 5) 9.30 – 9.354) 2,900 2,900
Capitalized feesEUR -620 2020 – -620 -620
USD -389 2020 – -342 -342
283,270 283,270
957,316 957,316
November 30, 2017
Currency in k Currency Amount Due byInterest rate
% p.a.Carrying
amount (EUR)Fair Value
(EUR)
Promissory loansEUR 169,500 20201) 0.98 169,500 169,500
EUR 20,000 20201) 0.752) 20,000 20,000
EUR 160,000 20221) 1.44 160,000 160,000
EUR 50,000 20221) 0.952) 50,000 50,000
EUR 25,500 20251) 2.04 25,500 25,500
EUR 90,000 20221) 0.82 90,000 90,000
EUR 5,500 20221) 0.602) 5,500 5,500
EUR 104,500 20241) 1.25 104,500 104,500
EUR 4,500 20241) 0.752) 4,500 4,500
EUR 45,500 20271) 1.72 45,500 45,500
Capitalized feesEUR -1,201 2020 – 20271) 0.60 – 2.04 -1,202 -1,202
673,798 673,798
BondEUR 300,000 20181) 5.00 300,000 306,6003)
Capitalized feesEUR -313 20181) 5.00 -313 –
299,687 306,6003)
Liabilities to banksUSD 200 2018 2.20 – 5.00 169 169
PLN 46,970 2018 2.23 – 2.264) 11,195 11,195
EUR 816 2018 0.23 816 816
ARS 2,518 2018 9.80 122 122
ARS 3,000 2019 22.50 145 145
INR 324,212 – 5) 9.30 – 9.354) 4,244 4,244
Capitalized feesEUR -274 2020 – -274 -274
USD -648 2020 – -547 -547
15,870 15,870
989,355 996,2681) Final maturity.2) These items relate to variable interest, however here only a margin is reported since the EURIBOR is negative as of the reporting date.3) The carrying amount of the bond does not correspond to its fair value.4) The indicated positions refer to variable interest.5) Operating loan facility, indefinite term.
151CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
The interest rates shown are the interest rates at the balance sheet date.
In connection with the refinancing of the syndicated loans, a revolving loan
agreement of EUR 450,000k was signed on June 9, 2015 with a five-year
term to maturity.
The bond with a nominal value of EUR 300,000k issued on May 19, 2011
with an issue price of 99.4% and a coupon of 5.0% p.a. was repaid as
planned and in full on May 21, 2018.
On November 10, 2015, promissory loans for a total of EUR 425,000k were
launched with maturities of five, seven and ten years. In connection with
the refinancing of the bond which was repaid in May 2018, promissory
loans for a total of EUR 250,000k were issued on September 27, 2017 with
maturities of five, seven and ten years.
The position “Other” includes the purchase price liability from the acquisition
of Sensile Medical in the amount of EUR 173,300k (thereof EUR 99,689k
current and EUR 73,611k non-current) and among other things finance
lease liabilities and accrued interest liabilities. Regarding lease agreements,
please refer to Note (33).
(32) Other Liabilities
Other liabilities break down as follows:
Nov. 30, 2018 Nov. 30, 2017
in EUR k TotalThereof: Current
Thereof:Non-
current TotalThereof: Current
Thereof:Non-
current
Prepayments received 34,927 34,507 420 29,028 28,183 845
Liabilities from other taxes 9,677 9,677 – 10,314 10,314 –
Liabilities from social security obligations 5,636 5,636 – 5,763 5,763 –
Other 57,882 57,799 83 57,179 56,932 247
Other liabilities 108,122 107,619 503 102,284 101,192 1,092
Prepayments received include EUR 31,669k (prior year: EUR 23,492k) relating
to customer-specific construction contracts.
For prepayments received in the amount of EUR 34,927k (prior year:
EUR 29,028k) collaterals amounting to EUR 320k (prior year: EUR 3,880k)
were given.
The position “Other” primarily relates to obligations to employees.
(33) Other Financial Obligations
Other financial obligations not recognized in the consolidated balance sheet
break down as follows:
in EUR k
Nov. 30, 2018
Nov. 30, 2017
Obligations under rental and operating lease agreements 37,905 39,810
Capital expenditure commitments 26,943 9,822
Sundry other financial obligations 7,703 7,516
Other financial obligations 72,551 57,148
The obligations under rental and operating lease agreements mainly relate
to plant as well as to land and buildings used for operating purposes.
Finance lease and operating lease obligations fall due as follows:
in EUR k Finance leases
Rentals and operating
leases
Minimum lease
paymentsInterest
componentPresent
valueNominal
value
Due within 1 year 4,300 216 4,084 11,191
Due 1 to 5 years 2,349 605 1,744 22,203
Due after 5 years 2,235 316 1,919 4,511
November 30, 2018 8,884 1,137 7,747 37,905
in EUR k Finance leases
Rentals and operating
leases
Minimum lease
paymentsInterest
componentPresent
valueNominal
value
Due within 1 year 922 253 669 10,599
Due 1 to 5 years 5,787 692 5,095 21,216
Due after 5 years 2,586 346 2,240 7,995
November 30, 2017 9,295 1,291 8,004 39,810
EUR 13,647k (prior year: EUR 14,120k) was recognized as expense in the
consolidated income statement in the financial year 2018 in connection
with rentals and operating leases.
152 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
(34) Reporting on Capital Management and Financial Instruments
The Group’s capital management objectives primarily consist of maintaining
and ensuring the best-possible capital structure to reduce cost of capital,
ensuring a sufficient level of cash and cash equivalents as well as active
management of net working capital. Net financial debt as of November 30,
2018 amounts to EUR 886,409k (prior year: EUR 712,660k); net working
capital is EUR 202,692k (prior year: EUR 185,715k).
The Gerresheimer Group’s risk management system for credit risk, liquidity
risk and individual market risks, including interest risks, currency risks and
other price risks, is described, including its objectives, policies and processes
and its measures to monitor the covenants to be complied with, in the
Opportunity and Risk Report section of the Group Management Report.
Please see Note (6) for further explanations.
Information on financial instruments by category and class
By type of determination of the fair values of financial assets and financial
liabilities, three hierarchy levels must be distinguished. Gerresheimer
reviews the categorization of fair value measurements to levels in the
fair value hierarchy at the end of each reporting period.
Level 1: Fair values are determined on the basis of quoted prices in an
active market.
Level 2: If no active market for a financial asset or a financial liability exists,
fair value is established by using valuation techniques. The fair
value measurements categorized in Level 2 were determined on
the basis of prices in the most recent transactions with willing and
independent parties or using valuation techniques that only take
into account directly or indirectly observable inputs.
Level 3: The fair value measurements are based on models incorporating
unobservable inputs that are significant to the measurement.
Nov. 30, 2018 Nov. 30, 2017
in EUR k Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Financial assets designated “available-for-sale”
Securities 74 – – 74 75 – – 75
Financial assets designated “at fair value through profit and loss”
Derivative financial assets – 204 – 204 – 1,037 – 1,037
Measured at fair value 74 204 – 278 75 1,037 – 1,112
Financial liabilities designated “at fair value through profit and loss”
Contingent purchase price liabilities – – 148,531 148,531 – – – –
Derivative financial liabilities – 1,346 – 1,346 – 372 – 372
Put options – – – – – – 11,897 11,897
Measured at fair value – 1,346 148,531 149,877 – 372 11,897 12,269
153CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
The following table shows the carrying amounts and fair values of the
individual financial assets and financial liabilities for each category of financial
instruments and reconciles them to the corresponding balance sheet items:
Nov. 30, 2018 Nov. 30, 2017
At amortized costAt fair value At amortized cost
At fair value
in EUR kCarrying amount
For infor-mation
purposes: Fair Value
Carrying amount
Balance sheet
amountCarrying amount
For infor-mation
purposes: Fair Value
Carrying amount
Balance sheet
amount
Trade receivables 217,920 217,920 – 217,9201) 217,841 217,841 – 217,8411)
Loans and receivables 217,920 217,920 – 217,841 217,841 –
Other financial assets 21,430 21,030 278 21,708 20,985 20,757 1,112 22,097
Available-for-sale financial assets 4002) – 74 2282) – 75
At fair value through profit or loss – – 204 – – 1,037
Loans and receivables 21,030 21,030 – 20,757 20,757 –
Cash and cash equivalents 80,570 80,570 – 80,570 287,036 287,036 – 287,036
Financial assets 319,920 319,520 278 320,198 525,862 525,634 1,112 526,974
Other financial liabilities 991,223 991,223 149,877 1,141,100 1,006,702 1,013,615 12,269 1,018,971
At amortized cost 991,223 991,223 – 1,006,702 1,013,615 –
At fair value through profit or loss – – 149,877 – – 12,269
Trade payables 207,402 207,402 – 207,402 176,303 176,303 – 176,303
At amortized cost 207,402 207,402 – 176,303 176,303 –
Financial liabilities 1,198,625 1,198,625 149,877 1,348,502 1,183,005 1,189,918 12,269 1,195,274
1) Receivables under construction contracts are additionally recognized in the consolidated balance sheet in the amount of EUR 55,611k (prior year: EUR 24,843k).2) Due to the non-availability of a reliably estimable quoted price, the valuation at fair value of investments with a carrying amount of EUR 400k (prior year: EUR 228k) is waived. The valuation is
based on acquisition cost.
Liabilities measured at amortized cost include finance lease liabilities for
which Group companies are the lessees. As of November 30, 2018, these
liabilities amount to EUR 7,747k (prior year: EUR 8,004k).
The fair values of receivables, loans and liabilities are measured at the present
value of future cash flows. The cash flows are discounted at an interest rate,
taking into account the maturity of the asset or the remaining term of the
liability and the counterparty’s credit standing as of the balance sheet date.
Due to the predominantly short terms, the fair values of trade receivables,
trade payables, other financial assets, other financial liabilities as well as cash
and cash equivalents do not differ significantly from their carrying amounts.
154 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet
Maturity analysis
The Group continually monitors liquidity risk. The maturities of the Group’s
financial liabilities as of November 30, 2018 are as follows. The amounts are
stated on the basis of the contractual, non-discounted payments.
Nov. 30, 2018
in EUR k
Due or due in 1 month
1 to 3 months
3 to 12 months
1 to 5 years
More than 5 years Total
Promissory loans – – – 495,000 180,000 675,000
Liabilities to banks 283,173 619 440 – – 284,232
Interest payments on promissory loans and liabilities to banks 614 7 8,031 26,025 2,899 37,576
Trade payables 154,405 49,155 3,722 120 – 207,402
Finance lease liabilities 82 207 4,011 2,349 2,235 8,884
Other 24,769 – 74,930 73,709 – 173,408
463,043 49,988 91,134 597,203 185,134 1,386,502
Nov. 30, 2017
in EUR k
Due or due in 1 month
1 to 3 months
3 to 12 months
1 to 5 years
More than 5 years Total
Promissory loans – – – 495,000 180,000 675,000
Bond and liabilities to banks 4,380 391 311,864 56 – 316,691
Interest payments on promissory loans, bond and liabilities to banks – 47 23,345 28,434 8,154 59,980
Trade payables 141,674 23,764 10,865 – – 176,303
Finance lease liabilities 78 195 649 5,787 2,586 9,295
Other – – 12,271 114 – 12,385
146,132 24,397 358,994 529,391 190,740 1,249,654
The liabilities to banks existing as of November 30, 2018 in the amount of
EUR 284,232k include EUR 264,397k (prior year: EUR 0k) drawings from
the revolving credit facility. These drawings are fully included under the item
“Due or due in 1 month”.
Hedges
Derivative financial instruments are used exclusively for hedging purposes.
The Group’s financial risks are monitored centrally as part of Group-wide
financial risk management. Identified potential risks are managed using
suitable hedging instruments on the basis of clearly defined guidelines.
The following table provides an overview of hedges as of the financial
year-end:
Nov. 30, 2018 Nov. 30, 2017
in EUR kExchange
rate hedgesExchange
rate hedges
Nominal value (gross) 130,8741) 372,6161)
Fair value (net) -1,142 665
Residual term 05/2019 05/2018
Carrying amount (underlying assets) 37,007 25,038
Carrying amount (underlying liabilities) 3,955 15,617
1) This also includes forward exchange contracts for receivables and payables between consolidated companies in the amount of EUR 89,912k (prior year: EUR 331,961k) that have been eliminated in the consolidation.
The derivative financial instruments are measured at fair values determined
by banks. As hedges, there is generally an economic relationship between
the hedging instruments and hedged operating items.
155CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Notes to the Consolidated Balance Sheet› Other Notes
Cash flow hedges
As of November 30, 2018, there is no hedging against interest rate risks.
Foreign exchange hedges
In accordance with internal financing guidelines, the Gerresheimer Group
used forward exchange contracts and currency swaps in the financial
year 2018 to hedge currency risks on foreign currency-denominated
receivables and payables. The sole risk exposure in connection with currency
management relates to transaction risks. The currency-derivatives are used
to hedge specific hedged items and are classified as hedging instruments.
Losses from derivative financial instruments of EUR 7,080k were recognized
in profit and loss in the financial year 2018 (prior year: EUR 14,689k gains).
Sensitivity analyses
Interest rate risk is presented using sensitivity analyses. The following
section describes the sensitivity of net income before income taxes and of
the cash flow hedge reserve recognized in equity to a reasonably possible
change in interest rates.
The interest rate sensitivity analyses are based on the following assumptions:
Changes in the market interest rate of non-derivative financial instruments
with fixed interest rates only affect net income when the instruments
are measured at fair value. In the Gerresheimer Group, all non-derivative
liabilities are measured at amortized cost. No financial liabilities with fixed
interest rates are therefore exposed to interest rate risk.
If the market interest rate had been 100 basis points higher or 100 basis
points lower as of November 30, 2018 (prior year: 100 basis points higher
or 100 basis points lower), net income before income taxes would have
been EUR 2,762k lower or EUR 2,762k higher (prior year: EUR 954k lower
or EUR 954k higher).
The following section describes the sensitivity of net income before income
taxes (due to the change in the fair values of monetary assets and liabilities)
to a reasonably possible change in exchange rates.
If the euro had increased (decreased) by 10% against all currencies as
of November 30, 2018, net income before income taxes would have
decreased by EUR 75k or increased by EUR 199k (prior year using the same
sensitivities: decrease of EUR 633k or increase of EUR 815k).
OTHER NOTES
(35) Segment Reporting
Segment reporting follows internal reporting according to the management
approach.
In the Gerresheimer Group, the Management Board of Gerresheimer AG,
as the chief operating decision maker, allocates resources to the operating
segments and assesses their performance. The reportable segments and
regions as well as the performance data shown are consistent with the
internal management and reporting system.
The Gerresheimer Group is managed through strategic business units
organized as divisions. These are aggregated into reporting segments
based on their specific production technologies and the materials we use
in our products.
The Gerresheimer Group is divided into the three reportable divisions
Plastics & Devices, Primary Packaging Glass and Advanced Technologies.
Plastics & Devices
The Plastics & Devices Division encompasses complex customer-specific
products for simple and safe drug delivery, these include insulin pens,
inhalers and prefillable syringes. The division also covers diagnostics and
medical technology products, such as skin-prick aids and test systems as
well as pharmaceutical plastic containers for liquid and solid medicines
with closure and safety systems.
We develop complex systems and system components made of plastic on
a project basis. Our target market here is made up of customers in the
pharma industry, diagnostics and medical technology. We provide tailored
services for these customers, spanning every link in the value chain. Our
Medical Plastic Systems products range from inhalers for the treatment
of respiratory diseases to lancets and insulin pen systems for diabetics,
as well as an extensive array of test systems and disposable products for
laboratory and molecular diagnostics.
156 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Other Notes
The Plastics & Devices Division also includes plastic system packaging for use
with liquid and solid medications. Our broad range of high-quality primary
drug packaging products includes application and dosage systems, such as
eyedroppers and nasal spray vials, as well as special containers for tablets
and powders. The range also includes tamper-evident multifunctional
closure systems, childproof and senior-friendly applications and integrated
moisture absorbers.
A feature of the US market for prescription medication is the pour-and-
count system. The precise amount of oral medication stated in a prescription
is specially packaged for each patient in a plastic container. We also have a
strong product portfolio for this market segment and we supply national
and regional pharmacy chains, supermarkets and wholesalers.
Primary Packaging Glass
In the Primary Packaging Glass Division we produce primary packaging
made of glass for medicines and cosmetics. This includes pharma jars,
ampoules, injection vials, cartridges, perfume flacons and cream jars, plus
special glass containers for the food and beverage industry.
Our range for the pharmaceutical industry covers a wide selection of glass
primary packaging products. Molded glass products meet market and
customer needs with a diverse range of injection, dropper and syrup bottles.
We also produce high-quality specialty products such as ampoules, vials and
cartridges from borosilicate glass tubing. On this basis, we offer a virtually
end-to-end range of pharmaceutical packaging in flint and amber glass.
Our product portfolio for the cosmetics industry encompasses high-quality
glass packaging such as vials and glass containers for perfumes, deodorants,
skin-care and wellness products. We process clear, colored and opal glass.
All shaping, coloring, printing and exclusive finishing technologies are
available to us for this purpose.
For the food and beverage industry, we supply both standard and custom
miniature and other sizes of bottles and glass containers for products such
as spirit miniatures. Our products include a range of variations such as
amber, flint, colored and opal glass, diverse shape variants and numerous
finishing options.
Advanced Technologies
The Advanced Technologies Division develops and manufactures intelligent
drug delivery systems. The Swiss tech company Sensile Medical, which was
acquired in the financial year 2018, forms the basis of this division, which
offers pharmaceutical and biotech companies drug delivery systems with
state-of-the-art digital and electronic capabilities. Its portfolio currently
comprises patented micro pumps, which are used to self-administer med-
ication for diabetes or Parkinson’s disease, for example.
The effects of services of Gerresheimer AG, consolidation measures and
inter-segment reconciliations are presented in the segment reporting in
the column “Head office/consolidation”. The measurement principles for
segment reporting are based on the IFRSs applied in the consolidated
financial statements.
Segmental performance is assessed and calculated according to the
following criteria:
› Intra-Group revenues are measured on an arm’s length basis. There
were no revenues with key accounts amounting to more than 10% of
Gerresheimer Group revenues neither for the financial year 2018 nor
for the prior year.
› Adjusted EBITDA is not defined in IFRS but represents a key performance
indicator for the Gerresheimer Group. Adjusted EBITDA is net income
before income taxes, net finance expense, amortization of fair value
adjustments, depreciation and amortization, impairment losses, restruc-
turing expenses and one-off income and expenses.
› Net working capital is defined as inventories, trade receivables and
prepayments made less downpayments received and trade payables.
› Operating cash flow is a key performance indicator comprising adjusted
EBITDA plus changes in net working capital at constant exchange rates
less capital expenditures adjusted by additions to finance leases.
› Capital expenditures comprise all additions to intangible assets and
property, plant and equipment measured at cost.
› Non-current assets do not include financial instruments, deferred tax
assets, post-employment benefits or rights arising from insurance contracts.
157CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Other Notes
In the following, the key indicators used by Gerresheimer AG for assessing
the performance of the divisions are shown as well as additional indicators
by region:
Segment Data by Division
Plastics & Devices Primary Packaging Glass Advanced Technologies1) Head office/consolidation Group
in EUR k 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
Segment revenues at constant exchange rates2) 777,923 757,179 617,578 591,994 12,860 – – – 1,408,361 1,349,173
Exchange rate effects -26,586 – -12,348 – – – – – -38,934 –Segment revenues 751,337 757,179 605,230 591,994 12,860 – – – 1,369,427 1,349,173Intra-Group revenues -1,615 -386 -82 -532 – – – – -1,697 -918Revenues with third parties 749,722 756,793 605,148 591,462 12,860 – – – 1,367,730 1,348,255
Adjusted EBITDA at constant exchange rates3) 210,852 215,226 116,271 115,971 2,955 – -22,123 -20,371 307,955 310,826
Exchange rate effects -7,846 – -1,557 – – – – – -9,403 –Adjusted EBITDA 203,006 215,226 114,714 115,971 2,955 – -22,123 -20,371 298,552 310,826Depreciation and amortization4) -46,797 -45,603 -47,913 -44,546 -1,097 – -647 -1,163 -96,454 -91,312Adjusted EBITA 156,209 169,623 66,801 71,425 1,858 – -22,770 -21,534 202,098 219,514Net working capital 86,564 90,580 106,676 99,218 12,581 – -3,129 -4,083 202,692 185,715Operating cash flow 140,182 157,996 60,219 71,950 -9,291 – -24,711 -25,302 166,399 204,644Capital expenditure5) 64,728 70,871 47,755 41,316 449 – 1,782 6,377 114,714 118,564Employees (average) 4,490 4,518 5,170 5,167 113 – 114 106 9,887 9,791
1) The Advanced Technologies Division, established following the acquisition of Sensile Medical, consists of the Sensile Medical Business Unit. The acquisition date for the acquisition of Sensile Medical was June 30, 2018. For further information, please see Note (2).
2) Revenues at constant exchange rates of the financial year 2017 were, for a better comparability, translated at the budget rates 2018, which are equivalent to the average rates of the financial year 2017 and can be found in Note (4).
3) Adjusted EBITDA at constant exchange rates: Net income before income taxes, net finance expense, amortization of fair value adjustments, depreciation and amortization, impairment losses, restructuring expenses, and one-off income and expenses. For a better comparability, adjusted EBITDA of financial year 2017 at constant exchange rates was translated at the budget rates 2018, which are equivalent to the average rates of the financial year 2017 and can be found in Note (4).
4) This includes impairment losses of EUR 1,845k (prior year: EUR 37k), thereof EUR 65k (prior year: EUR 0k) relating to the Primary Packaging Glass Division and EUR 1,780k (prior year: EUR 37k) relating to the Plastics & Devices Division.
5) Capital expenditure includes additions due to finance leases amounting to EUR 149k (prior year: EUR 2,045k), which were not cash effective in the reporting period.
Key Indicators by Region1)
Europe Germany Americas Emerging markets Other regions Group
in EUR k 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
Revenues by target region2) 459,685 428,906 304,500 313,058 374,806 373,704 206,841 206,497 21,898 26,090 1,367,730 1,348,255Revenues by region of origin3) 267,391 256,207 521,518 513,557 354,745 350,462 224,076 228,029 – – 1,367,730 1,348,255Non-current assets4) 554,315 142,960 656,821 631,096 739,301 738,232 185,442 200,490 – – 2,135,879 1,712,778Employees (average) 1,921 1,867 3,448 3,365 1,086 1,034 3,432 3,525 – – 9,887 9,791
1) For further explanations on the regions we refer to Note (8). 2) Revenues by location of customer registered office.3) Revenues by location of supplier registered office.4) Non-current assets do not include financial instruments, deferred tax assets, post-employment benefits or rights arising from insurance contracts.
158 Gerresheimer AG ANNUAL REP ORT 2018CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Other Notes
Reconciliation from adjusted segment EBITA of the divisions to net income
is shown in the following table:
in EUR k 2018 2017
Adjusted segment EBITA 224,868 241,048
Head office/consolidation -22,770 -21,534
Adjusted Group EBITA 202,098 219,514
Acquisition Sensile Medical -1,628 –
Refinancing – -313
Portfolio optimization -14,506 -2,705
One-off expenses and income -5,898 -2,160
Amortization of fair value adjustments -40,607 -33,540
Results of operations 139,459 180,796
Net finance expense -32,262 -35,308
Income taxes 23,931 -42,436
Net income 131,128 103,052
(36) Auditor Fees
The auditor of the individual and consolidated financial statements of
Gerresheimer AG is Deloitte GmbH Wirtschaftsprüfungsgesellschaft,
Duesseldorf (Germany). The audit opinion is signed by André Bedenbecker
(since the financial year 2016) and René Kadlubowski (since the financial year
2016). René Kadlubowski is deemed to be the auditor in charge since the
financial year 2016 for Gerresheimer AG.
Deloitte GmbH Wirtschaftsprüfungsgesellschaft has been the auditor for
Gerresheimer AG since 2009.
The following fees have been recognized as expense for services provided by
Deloitte GmbH Wirtschaftsprüfungsgesellschaft:
in EUR k 2018 2017
Financial statements auditing 619 574
Other assurance services 67 11
Auditor Fees 686 585
(37) Related Party Disclosures
In the course of our operating activities, we conduct business with legal
entities and individuals who are able to exert influence on Gerresheimer AG or
its subsidiaries or are controlled or significantly influenced by Gerresheimer AG
or its subsidiaries.
Related parties include companies that are related parties of members of
the Supervisory Board of Gerresheimer AG, non-consolidated companies
and associates, and members of the Gerresheimer AG Supervisory Board
and Management Board.
For information on the remuneration of the Management Board and the
Supervisory Board, please refer to Note (38) and to the remuneration report
in the Group Management Report.
The table below shows transactions with related parties:
2018 November 30, 2018
in EUR k
Sale of goods
and services
Purchase of goods
and services
Trade receivables
Trade payables
Company in relation to a member of the Gerresheimer AG Supervisory Board 2,877 – 466 –
Associated companies 15 2,526 – 126
2,892 2,526 466 126
2017 November 30, 2017
in EUR k
Sale of goods
and services
Purchase of goods
and services
Trade receivables
Trade payables
Company in relation to a member of the Gerresheimer AG Supervisory Board 2,968 – 452 –
Associated companies 17 3,261 – 393
2,985 3,261 452 393
The transactions carried out are attributable the Vetter Pharma-Fertigungs
GmbH & Co. KG, Ravensburg (Germany), which is related to a member of
the Supervisory Board.
All transactions are conducted at market prices and on arm’s length terms.
(38) Total Remuneration of the Members of the Supervisory Board
and Management Board
Remuneration of the members of the Supervisory Board of Gerresheimer AG
totaled EUR 1,141k in the financial year 2018 (prior year: EUR 1,073k).
Remuneration of the active Management Board members during the financial
year, made up of fixed salary (including fringe benefits), performance-linked
bonuses and long-term share-price-based variable cash remuneration, came
to EUR 10,195k in the financial year 2018 (prior year: EUR 5,740k). In the
current year, this includes an amount of EUR 4,100k in relation to the
unexpected departure of the former Chairman of the Management Board
of Gerresheimer AG due to personal reasons.
159CONSOL I DATED F INANCI AL S TATEMENT S › Notes to the Consolidated Financial Statements› Other Notes
The fair value of the 2018 to 2021 tranches of Management Board stock
appreciation rights (tranches 12 to 15) was EUR 3,294k as of the reporting
date (prior year: tranches 11 to 15 EUR 4,877k). Expenses for additions
to the provision for stock appreciation rights as granted at the reporting
date (tranches 8 to 15) amount to EUR 2,563k (prior year: tranches 7 to 15
EUR 1,781k). For further details, please see Note (29).
Defined benefit contributions were granted to the active members of the
Management Board Mr. Beaujean and Mr. Schütte. The defined benefit
contribution granted to Mr. Schütte is processed by a provident fund. The
present value of the defined benefit obligation, before offset against plan
assets, is EUR 5,578k (prior year: EUR 4,806k).
The present value of the defined benefit obligation for former members
of management and their dependents, before offset against plan assets, is
EUR 29,252k (prior year: EUR 29,965k). Regular payments for pensions and
other benefits amounted to EUR 1,287k (prior year: EUR 1,278k).
The active members of the Management Board, Mr. Siemssen and
Dr. Burkhardt have decided for option (3), payment of 20% of fixed salary
and 20% of short-term variable cash remuneration. Expenses for these
contributions granted amounted to EUR 181k in the financial year 2018
(prior year: EUR 0k).
Further information on the remuneration of the members of the Manage-
ment Board is provided in the Remuneration Report section of the Group
Management Report.
(39) Corporate Governance
Corporate governance represents a company’s entire management and
monitoring system, including its organization, business policies and guide-
lines as well as internal and external control mechanisms. The aim of good
corporate governance is responsible and transparent corporate management
and control geared to sustained value creation. This enhances the confi-
dence of national and international investors, business partners, financial
markets, employees and the public in the management and control of
Gerresheimer AG.
Gerresheimer AG is required as a listed company to stating to what extent it
complies with the recommendations of the German Corporate Governance
Code and any recommendations it has not or will not comply with and why
not (“comply or explain”).
The Management Board and Supervisory Board of Gerresheimer AG most
recently adopted the following declaration of compliance in accordance with
section 161 of the German Stock Corporation Act (Aktiengesetz/AktG) as
follows on September 6, 2018:
With the exception of the recommendation of number 5.4.1, paragraph 2
sentence 2 Gerresheimer AG has complied with all recommendations of the
“Government Commission on the German Corporate Governance Code”
as amended on February 7, 2017, since its last declaration on September 5,
2017. Gerresheimer AG will in future comply with all recommendations
of the “Government Commission on the German Corporate Governance
Code” as amended on February 7, 2017, again with the following exception:
Number 5.4.1, paragraph 2 sentence 2: The Supervisory Board has not
defined a regular limit for length of membership on the Supervisory Board.
The declaration is available from the Company website (www.gerresheimer.com/
en/investor-relations).
(40) Events after the Balance Sheet Date
After November 30, 2018, a customer of Sensile Medical terminated a
project without substantive reasons. According to the contract, purchase
price components in the amount of approximately EUR 90m will not be
paid out by Gerresheimer to the former shareholders of Sensile Medical.
The derecognition of the accounted liability will result in a positive effect on
adjusted EBITDA in the first quarter 2019 as well as a reduction of debt at
the end of the financial year 2019. Other than that, Gerresheimer Group
expects only little impact on revenues and adjusted EBITDA from the loss of
this project. Possible effects on the recoverability of the goodwill and the
technologies are currently being analyzed. Regardless of the outcome of the
analysis, this will not have material impacts on adjusted EBITDA.
Beyond that there were no further subsequent events after November 30,
2018 that are expected to have a material impact on the net assets, financial
position or results of operations of the Gerresheimer Group.
The financial statements were prepared by the Management Board at its
meeting on February 4, 2019, authorized for publication and will be submitted
by the Audit Committee to the Supervisory Board for approval in its meeting
on February 13, 2019.
Duesseldorf, Germany, February 4, 2019
The Management Board
Dietmar Siemssen Rainer Beaujean
Dr. Lukas Burkhardt Andreas Schütte
160 Gerresheimer AG ANNUAL REP ORT 2018RESP ONS IB I L I T y S TATEMENT
To the best of our knowledge, and in accordance with the applicable report-
ing principles, the consolidated financial statements give a true and fair view
of assets, liabilities, financial position and profit or loss of the Group, and
the Group Management Report includes a fair review of the development
and performance of the business and the position of the Group, together
with a description of the principal opportunities and risks associated with
the expected development of the Group.
Duesseldorf, Germany, February 4, 2019
The Management Board
Dietmar Siemssen Rainer Beaujean
Dr. Lukas Burkhardt Andreas Schütte
RESPONSIBILITY STATEMENT
161INDEPENDENT AUDI TOR S’ REP ORT
To Gerresheimer AG, Düsseldorf/Germany
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE GROUP MANAGEMENT REPORT
Audit opinions
We have audited the consolidated financial statements of Gerresheimer AG,
Düsseldorf/Germany, and its subsidiaries (the Group), which comprise the
group balance sheet as at 30 November 2018, the group income statement,
the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated cash flow statement
for the business year from 1 December 2017 to 30 November 2018 as well
as the notes to the consolidated financial statements, including a summary
of significant accounting policies. In addition, we have audited the group
management report of Gerresheimer AG, Düsseldorf/Germany, for the
business year from 1 December 2017 to 30 November 2018. In accordance
with the German legal requirements, we have not audited the contents
of the section “Non-financial group statement pursuant to Section 315b
German Commercial Code (HGB)” and of the group statement on corporate
governance included in the group management report.
In our opinion, based on our knowledge obtained during the audit
› the accompanying consolidated financial statements comply with Interna-
tional Financial Reporting Standards (IFRS) as adopted by the EU and the
supplementary German legal regulations to be applied in accordance with
Section 315e (1) German Commercial Code (HGB) in all material respects
and give a true and fair view of Group’s net assets and financial position as
at 30 November 2018 as well as its results of operations for the business
year from 1 December 2017 to 30 November 2018 in accordance with
these requirements and
› the accompanying group management report as a whole provides a
suitable view of the Group’s position. In all material respects, this group
management report is consistent with the consolidated financial statements,
complies with the German legal requirements and suitably presents the
opportunities and risks of future development. Our audit opinion on the
group management report does not cover the contents of the section
“Non-financial group statement pursuant to Section 315b German Com-
mercial Code (HGB)” and of the group statement on corporate governance.
Pursuant to Section 322 (3) Sentence 1 German Commercial Code (HGB),
we state that our audit has not led to any reservations with respect to the
propriety of the consolidated financial statements and the group manage-
ment report.
Basis for the audit opinions
We conducted our audit of the consolidated financial statements and group
management report in accordance with Section 317 German Commercial
Code (HGB) and the EU Audit Regulation (No. 537/2014, hereinafter “EU
Audit Regulation”), and German generally accepted standards for the audit
of financial statements promulgated by the Institute of Public Auditors in
Germany [Institut der Wirtschaftsprüfer] (IDW). Our responsibilities under
these requirements and principles are further described in the section “Au-
ditor’s responsibility for the audit of the consolidated financial statements
and the group management report” of our report. We are independent of
the group companies in accordance with European and German commercial
law and rules of professional conduct and we have fulfilled our other ethical
responsibilities applicable in Germany in accordance with these requirements.
In addition, pursuant to Article 10 (2) Lit. f EU Audit Regulation, we declare
that we have not provided any prohibited non-audit services pursuant to
Article 5 (1) EU Audit Regulation. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinions
on the consolidated financial statements and the group management report.
Key audit matters in the audit of the consolidated financial
statements
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated financial statements
for the business year from 1 December 2017 to 30 November 2018. These
matters were addressed in the context of our audit of the consolidated
financial statements as a whole and in forming our audit opinion thereon;
we do not provide a separate opinion on these matters.
Details on the audit matters which, from our point of view, are of most
significance are provided below:
1 Balance sheet presentation of acquisition of Sensile Medical AG
2 Recoverability of goodwill
3 Deferred taxes on deductible temporary valuation differences and on
loss carryforwards
4 Adjustment of EBITDA
Our presentation of these key audit matters was structured as follows:
a Description of matters (including reference to related disclosures
in consolidated financial statements)
b Audit procedure
1 Balance sheet presentation of acquisition of Sensile Medical AG
a On 11 July 2018, Gerresheimer AG signed a share purchase agree-
ment on the acquisition of around 99.89% of the shares in Sensile
Medical AG, Olten/Switzerland, (Sensile Medical) for a purchase
consideration of mEUR 335.2. Sensile Medical forms the basis of
the new Advanced Technologies business segment, which relates
to development and production of intelligent systems for adminis-
tering drugs.
INDEPENDENT AUDITORS’ REPORT
162 Gerresheimer AG ANNUAL REP ORT 2018INDEPENDENT AUDI TOR S’ REP ORT
Besides the partial amount of mEUR 160.6 paid on 17 July 2018
in respect of the redemption of loans payable totaling mEUR 12.7
and a fixed payment of mEUR 24.8 due in December 2018, the
purchase agreement provides for further contingent elements of
the purchase consideration depending on the contractually defined
milestones to be reached until the end of 2020. The measurement
of these contingent purchase consideration payments is based on
the Executive Board’s assessment that all milestones will be reached
and further payments up to a non-discounted amount totaling
mEUR 149.8 will consequently fall due.
At the time of acquisition, the acquired assets and liabilities are
recognized at the fair values which were determined by means
of a purchase consideration allocation carried out by an external
expert engaged by Gerresheimer. The goodwill recognized is the
portion of the goodwill which is not allocated to the assets and
liabilities acquired as part of the purchase consideration alloca-
tion. After the net working capital and net debt adjustments
contractually agreed in the fourth quarter of 2018, this portion is
mEUR 5.0. In addition, intangible assets totaling mEUR 420.3 were
recognized as part of the purchase consideration allocation. These
mainly relate to technologies, accounting for mEUR 394.9. The
core technologies have been patented.
The balance sheet presentation of the acquisition of Sensile Medical was
of most significance in our audit because, especially for the identified
technologies, there are no market values; therefore, complex, assump-
tion-based valuation models were used in determining the fair values.
The result of the valuation depends to a large extent on the forecasted
future cash flows as well as on the capital cost rates used and involves
a high degree of uncertainty on account of the existing related judg-
ments. In addition, there is a risk that the comprehensive disclosures in
the notes to the consolidated financial statements required to be made
under IFRS 3 are incomplete or inappropriate.
The Company’s disclosures on the acquisition of Sensile Medical
are presented in Note 2 of the notes to the consolidated financial
statements as well as in the section concerning the financial and cash
position in the group management report.
b In auditing the balance sheet presentation of the acquisition of
Sensile Medical, we inspected, audited and assessed the con-
tractual agreements. As part of this, we reconciled, among other
things, the proportionate purchase consideration previously paid by
Gerresheimer with the supporting evidence of the payments made
which had been made available to us.
In auditing the preliminary purchase consideration allocation,
we assured ourselves beforehand of the qualification and the
objectivity of the external expert engaged for this purpose by
Gerresheimer. Supported by our internal valuation experts, we
assessed the appropriateness of the valuation models and meth-
ods applied. We assessed the reasonableness of the assumptions
included in the Executive Board’s planning on the basis of market
expectations and due diligence reports and at meetings with the
Executive Board and the external expert. Our related focus was
on auditing the identification and valuation of the technologies
recognized and their value-driving factors. Major value-driving
factors are especially the term of the underlying patents and
the useful lives of the respective technologies.
Furthermore, we audited the completeness of the disclosures in the
notes to the financial statements required to be made under IFRS 3
by means of checklists.
2 Recoverability of goodwill
a In the consolidated financial statements of Gerresheimer AG,
goodwill totaling mEUR 670.6 (24.6% of the balance sheet total)
is disclosed under the balance sheet item “intangible assets”.
The goodwill is tested for impairment at least annually or on specific
occasions (impairment tests), with the carrying amounts of the
cash-generating units being compared with the respective realizable
amount. The realizable amount is determined based on the value in
use. For this purpose, the planned future cash inflows (cash flows)
are discounted (DCF method). The cash flow forecasts are based
on the corporate planning for the next five years approved by the
Executive Board, taken note of by the Supervisory Board, and valid
at the time the impairment test is conducted, which also takes
into account expectations concerning the future market trend and
country-related assumptions concerning the trends of macroeco-
nomic variables. The discounting is made by means of weighted
capital costs of the respective cash-generating unit.
Since the result of these measurements depends to a large extent on
the assessment of the future cash flows through the Executive Board
and on the discount factor used and thus involves a high degree of
uncertainty, this matter was of most significance in our audit.
The Company’s disclosures on goodwill are included in Notes 5 and
18 of the notes to the consolidated financial statements.
b As part of our audit, we verified, among other things, the methodical
procedure for performing the impairment tests, assessed the determi-
nation of weighted capital costs, and, calling in our valuation experts,
assessed the method of computing the impairment test. We assured
ourselves that the future cash flows used for valuation purposes are
appropriate by, among other things, reconciling these cash flows
with the current 5-year planning prepared by the Executive Board
and taken not of by the Supervisory Board as well as by obtaining
from the Executive Board information about the material assump-
tions underlying this planning. In addition, we reconciled these cash
flows with general and industry-related market expectations. Our
audit also covered auditing whether costs for group functions have
appropriately been taken into account in the impairment tests of
the respective cash-generating units.
163INDEPENDENT AUDI TOR S’ REP ORT
Knowing that even relatively minor changes in the discount fac-
tor used may have major effects on the amount of the realizable
value determined, we intensively dealt with the parameters used
in determining the discount factor used and verified the compu-
tation formula. Furthermore, we performed supplementary own
sensitivity analyses on account of the material importance of the
goodwill for the Group’s net assets in order to be able to assess
a potential impairment risk in the event of a potential change in
a major assumption underlying the measurement. Moreover, we
audited the completeness and appropriateness of the disclosures
in the notes to the consolidated financial statements required to
be made under IAS 36.
3 Deferred taxes on deductible temporary differences
and on loss carryforwards
a In the consolidated financial statements of Gerresheimer AG, de-
ferred tax assets totaling mEUR 19.5 net of deferred tax liabilities
(before netting mEUR 57.3; of which mEUR 21.9 related to tax loss
carryforwards) are disclosed in the group balance sheet. No deferred
tax assets were recognized in relation to tax loss carryforwards
totaling mEUR 75.4 because these arose at a time prior to the
establishment of a group taxation relationship (mEUR 15.2) or are
not expected to be realized within the next five years (mEUR 60.2).
The tax planning is based on the corporate planning approved by
the Executive Board and taken note of by the Supervisory Board.
From our point of view, the deferred tax assets were of most signi-
ficance because the corporate planning, as the basis of deferred tax
asset recoverability, is to a large extent depending on the assess-
ment and the assumptions of the Executive Board and therefore
involves a high degree of uncertainty.
The Company’s disclosures on deferred taxes are included in Notes 5,
15 and 23 of the notes to the consolidated financial statements.
b As part of our audit, we verified, calling in our tax experts, the
recognition and measurement of deferred taxes. We evaluated the
recoverability of deferred tax assets related to deductible differences
and loss carryforwards on the basis of the corporate planning and
internal forecasts of the Company concerning the future tax income
situation of the respective Company and assessed the appropri-
ateness of the assumptions used. Furthermore, we verified the
reconciliation to the tax result and the computational accuracy.
Moreover, we audited the completeness and appropriateness of
the disclosures in the notes to the consolidated financial statements
required to be made under IAS 12.
4 Adjustment of EBITDA
a Gerresheimer defined the following ratios as most significant
financial performance indicators, which play a major role within
the framework of capital market communication: revenue growth,
adjusted EBITDA, operating cash flow, capital investments, net
working capital and ROCE. These are used by the Company as the
central financial performance indicators.
The growth is measured by Gerresheimer by means of the organic
revenue variation, i.e. in the event of acquisitions or disinvestments,
both resulting effects and currency effects are adjusted.
Profitability is primarily determined by Gerresheimer by means
of the adjusted EBITDA. The EBITDA adjustments shown in the
consolidated financial statements total mEUR -22.0. The adjusted
EBITDA are consolidated earnings before income taxes, finance
result, write-downs of fair value adjustments, depreciation, amor-
tization and impairment losses, restructuring expense as well as
one-off income and expenses. These one-off income and expenses
of Gerresheimer include severance pay for the Executive Board,
refinancing costs, costs related to major workforce reduction and
restructurings (structural and strategic) which do not meet the strict
criteria of IAS 37, costs of acquisitions (until the time of acquisi-
tion) and disinvestments, costs related to Gerresheimer’s history,
such as, for instance, arbitration court proceedings, and findings
of government tax audits. The definition of the adjusted EBITDA
remained unchanged and the adjustments were made by contin-
uously applying this definition. In the reporting year, they mainly
relate to portfolio optimization (mEUR -14.5) and to the negative
balance of one-off expenses and income (mEUR -5.9).
The operating cash flow has been defined as follows: Adjusted
EBITDA plus or less changes in net working capital less capital invest-
ments. The net working capital includes inventories, trade receivables,
trade payables as well as payments received/made on account.
ROCE has been defined by Gerresheimer as follows: Adjusted EBITA in
relation to average capital employed, i.e. equity plus interest-bearing
liabilities less cash and cash equivalents or alternatively balance sheet
total less interest-free liabilities and cash and cash equivalents.
The adjustments of the most important financial performance
indicators were most significant in our audit because these are
made on the basis of Gerresheimer’s internal definition and there
is a risk of unilateral judgments through the Executive Board.
The definition used by the Executive Board was reconciled with
the Supervisory Board in April 2013.
164 Gerresheimer AG ANNUAL REP ORT 2018INDEPENDENT AUDI TOR S’ REP ORT
The disclosures on the adjustments as well as their determination
are presented in Note 35 of the notes to the consolidated financial
statements as well as in the sections “Overview of business develop-
ment”, “Revenue trend”, “Results of operations”, “Net assets”,
“Financial and cash position” of the group management report.
b We audited the determination of the ratios and assessed the special
factors identified by the Executive Board in a skeptical manner. In
line with this, we audited, on the basis of the findings of the audit
and the information obtained from the Supervisory Board, whether
the adjustments were made in accordance with the definition and
procedure specified in the explanations in the segment reporting.
Other information
The Executive Board is responsible for the other information. The other
information comprises:
› the section “Non-financial group statement pursuant to Section 315b
German Commercial Code (HGB)” of the group management report,
› the group statement on corporate governance pursuant to Section 315d
German Commercial Code (HGB) included in the group management
report,
› the corporate governance report pursuant to No. 3.10 of the German
Corporate Governance Code,
› the assurance pursuant to Section 297 (2) Sentence 4 German Commer-
cial Code (HGB) regarding the consolidated financial statements and the
assurance pursuant to Section 315 (1) Sentence 5 German Commercial
Code (HGB) regarding the group management report, and
› the remaining parts of the annual report, with the exception of the audited
consolidated financial statements and group management report as well
as our auditors’ report.
Our audit opinions on the consolidated financial statements and the group
management report do not extend to cover the other information, and
accordingly we do not issue an audit opinion or any other form of assurance
conclusion thereon.
In connection with our audit, our responsibility is to read the other information
and, in doing so, to consider whether the other information
› is materially inconsistent with the consolidated financial statements, the
group management report or our knowledge obtained in the audit, or
› otherwise appears to be substantially misstated.
Responsibilities of the Executive Board and the
Supervisory Board for the consolidated financial statements
and the group management report
The Executive Board is responsible for the preparation of the consolidated
financial statements, which comply with IFRS as adopted by the EU and the
supplementary requirements of the German legal regulations pursuant to
Section 315e (1) German Commercial Code (HGB) in all material respects, so
that the consolidated financial statements give a true and fair view of the net
assets, financial position and results of operations of the Group in accordance
with these requirements. In addition, the Executive Board is responsible for
the internal controls it has identified as necessary in order to enable the
preparation of consolidated financial statements that are free from material
misstatements, whether intentional or unintentional.
In preparing the consolidated financial statements, the Executive Board is
responsible for assessing the Group’s ability to continue as a going concern.
Furthermore, it has the responsibility to disclose matters related to going
concern, as applicable. In addition, it is responsible for using the going concern
basis of accounting, unless the intention is to liquidate the Group or to cease
operations, or there is no realistic alternative but to do so.
In addition, the Executive Board is responsible for the preparation of the
group management report, which as a whole provides a suitable view of the
Group’s position, is consistent with the consolidated financial statements in
all material respects, complies with the German legal regulations and suitably
presents the opportunities and risks of future development. Furthermore, the
Executive Board is responsible for such arrangements and measures (systems)
which it has deemed necessary in order to enable the preparation of a group
management report in accordance with the German legal regulations to be
applied and to furnish sufficient and appropriate evidence for the statements
in the group management report.
The Supervisory Board is responsible for overseeing the Group’s financial
reporting process for the preparation of the consolidated financial statements
and the group management report.
Auditor’s responsibility for the audit of the consolidated
financial statements and the group management report
Our objectives are to obtain reasonable assurance about whether the consol-
idated financial statements as a whole are free from material misstatements,
whether due to fraud or error, and whether the group management report
as a whole provides an appropriate view of the Group’s position and, in all
material respects, is consistent with the consolidated financial statements and
the findings of the audit, is in accordance with the German legal regulations,
and appropriately presents the opportunities and risks of future development,
as well as to issue an auditors’ report that includes our audit opinions on
the consolidated financial statements and the group management report.
Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Section 317 German Com-
mercial Code (HGB) and the EU Audit Regulation and German generally
accepted standards for the audit of financial statements promulgated by the
Institute of Public Auditors in Germany (IDW), will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken
on the basis of these consolidated financial statements and this group
management report.
165INDEPENDENT AUDI TOR S’ REP ORT
As part of an audit, we exercise professional judgment and maintain pro-
fessional skepticism. We also
› identify and assess the risks of material misstatements in the consolidated
financial statements and in the group management report, whether due
to fraud or error, design and perform audit procedures responsive to those
risks and obtain audit evidence that is sufficient and appropriate to provide
a basis for our audit opinions. The risk of not detecting a material misstate-
ment resulting from fraud is higher than one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
› obtain an understanding of internal control relevant to the audit of the
consolidated financial statements and the arrangements and measures
relevant to the audit of the group management report in order to design
audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of these systems.
› evaluate the appropriateness of the accounting policies used by the Exec-
utive Board and the reasonableness of accounting estimates and related
disclosures made by the Executive Board.
› conclude on the appropriateness of the Executive Board’s use of the going
concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that there is a material uncertainty, we are required
to draw attention in our auditors’ report to the related disclosures in the
consolidated financial statements and group management report, or, if
such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditors’
report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
› evaluate the overall presentation, structure and content of the consol-
idated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions
and events in a manner that the consolidated financial statements give a
true and fair view of the net assets and financial position as well as the
results of operations of the Group in accordance with IFRS as adopted by
the EU and the supplementary requirements of German law pursuant to
Section 315e (1) German Commercial Code (HGB).
› obtain sufficient appropriate audit evidence regarding the financial informa-
tion of the entities or business activities within the Group to express opin-
ions on the consolidated financial statements and the group management
report. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinions.
› evaluate the consistency of the group management report with the con-
solidated financial statements, its legal consistency and the view provided
of the Group’s position.
› perform audit procedures on the forward-looking information presented
by the Executive Board in the group management report. On the basis of
sufficient appropriate audit evidence, we particularly evaluate the significant
assumptions underlying the forward-looking information by the Executive
Board and evaluate the correct derivation of forward-looking information
from these assumptions. We do not issue an independent opinion on the
forward-looking information or on the underlying assumptions. There is
a significant unavoidable risk that future events will differ materially from
the forward-looking information.
We communicate with those charged with governance, among other matters,
the planned scope and timing of the audit and significant audit findings,
including any deficiencies in internal control, which we identify during our
audit.
We provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and
communicate with them all relationships and other matters that may rea-
sonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of most significance in the audit of the
consolidated financial statements of the current reporting period and are
therefore the key audit matters. We describe these matters in our auditors’
report unless law or regulation precludes public disclosure about the matter.
OTHER LEGAL AND REGULATORY REQUIREMENTS
Other information pursuant to Article 10 EU Audit Regulation
We were appointed by the annual general meeting on 25 April 2018 to audit
the consolidated financial statements. We were engaged by the Supervisory
Board on 6 September 2018. Our total uninterrupted period of engagement
as auditor of the consolidated financial statements covers the period since
the business year 2008/2009, we have been engaged continuously as the
group auditor of Gerresheimer AG, Düsseldorf/Germany.
We confirm that the audit opinions contained in this auditors’ report are
consistent with the additional report to the audit committee pursuant to
Article 11 EU Audit Regulation (audit report).
RESPONSIBLE AUDITOR
The auditor responsible for the audit is René Kadlubowski.
Düsseldorf/Germany, 4 February 2019
Deloitte GmbH
Wirtschaftsprüfungsgesellschaft
Signed: André Bedenbecker Signed: René Kadlubowski
Wirtschaftsprüfer Wirtschaftsprüfer
[German Public Auditor] [German Public Auditor]
166 Gerresheimer AG ANNUAL REP ORT 2018Superv i Sory Board and ManageMent Board
SUPERVISORY BOARDFinancial year 2018
Dr. Axel Herberg
Chairman of the Supervisory Board
Managing Partner of CCC Investment GmbH
a) Leica Camera AG
b) Leica Group (photography and sport optics)
Lisa Germany Holding GmbH
Vetter Pharma-Fertigungs GmbH & Co. KG
Francesco Grioli
Deputy Chairman of the Supervisory Board
Member of the Governing Board of IG Bergbau, Chemie, Energie
a) Continental AG (since November 1, 2018)
BASF SE (until May 4, 2018)
Villeroy & Boch AG (until March 23, 2018)
b) Steag New Energies GmbH (Deputy Chairman)
(until December 31, 2017)
Villeroy & Boch Fliesen GmbH (until May 31, 2018)
Andrea Abt
Master of Business Administration
Former Head of Supply Chain Management of the Siemens AG
Sector Infrastructure
b) SIG plc, United Kingdom
John Laing Group plc, United Kingdom (since May 10, 2018)
Petrofac Ltd., Jersey
Heike Arndt
Regional Deputy Director Westphalia of IG Bergbau, Chemie, Energie
a) RAG Verkauf GmbH
b) DTM GmbH & Co. KG (Deputy Chairwoman of the Supervisory Board)
(until December 31, 2018)
Dr. Karin Dorrepaal
Consultant
Former Member of the Management Board of Schering AG
a) Paion AG (Deputy Chairwoman)
b) Triton Beteiligungsberatung GmbH
Almirall S.A., Spain
Kerry Group plc, Ireland
Humedics GmbH (Chairwoman)
Julius Clinical Research BV, The Netherlands
Franz Hartinger
Chairman of the Company Works Council of
Gerresheimer Regensburg GmbH
a) Gerresheimer Regensburg GmbH
Dr. Peter Noé
Degree in Business Administration
Former Member of the Management Board of Hochtief AG
b) BlackRock Asset Management Schweiz AG, Switzerland
Markus Rocholz
Chairman of the Company Works Council of Gerresheimer Essen GmbH
a) Gerresheimer Tettau GmbH
Paul Schilling
Chairman of the Company Works Council of Gerresheimer Bünde GmbH
a) Gerresheimer Bünde GmbH (since May 25, 2018)
Katja Schnitzler
Group Director Business Excellence and Continuous Improvement of
Gerresheimer AG
Theodor Stuth
Auditor and Certified Tax Advisor
b) Wickeder Holding GmbH
Wickeder Profile Walzwerk GmbH
Linet Group SE, The Netherlands
Udo J. Vetter
Pharmacist and General Partner of UV-Cap GmbH & Co. KG
a) ITM AG (Chairman)
b) Vetter Pharma-Fertigungs GmbH & Co. KG (Chairman)
HSM GmbH & Co. KG
Navigo GmbH (Chairman) (since December 1, 2017)
OncoBeta International GmbH (Chairman) (since December 1, 2017)
OncoBeta GmbH (Chairman) (since December 1, 2017)
Paschal India Pvt. Ltd., India (Chairman)
SUPERVISORY BOARD AND MANAGEMENT BOARD
a) Membership in Supervisory Boards according to German legal regulations b) Membership in comparable domestic and foreign control boards of economic enterprises
167Superv i Sory Board and ManageMent Board
Dr. Lukas Burkhardt (since January 1, 2018)
a) Gerresheimer Tettau GmbH (Chairman) (since February 10, 2018)
b) Gerresheimer Momignies S.A., Belgium (Chairman)
(since February 15, 2018)
Gerresheimer Glass Inc., USA (since February 10, 2018)
Corning Pharmaceutical Packaging LLC, USA (since February 10, 2018)
Gerresheimer Queretaro S.A., Mexico (Chairman)
(since February 9, 2018)
Gerresheimer Pharmaceutical Packaging Mumbai Pvt. Ltd., India
(since June 30, 2018)
Neutral Glass and Allied Industries Pvt. Ltd., India (since June 30, 2018)
Gerresheimer Shuangfeng Pharmaceutical Glass (Danyang)
Co. Ltd., China (Chairman) (since February 10, 2018)
Gerresheimer Shuangfeng Pharmaceutical Packaging (Zhenjiang)
Co. Ltd., China (Chairman) (since February 10, 2018)
Andreas Schütte
a) Gerresheimer Regensburg GmbH (Chairman)
Gerresheimer Bünde GmbH (Chairman) (since April 16, 2018)
b) Gerresheimer Denmark A/S, Denmark (Chairman)
Gerresheimer Vaerloese A/S, Denmark (Chairman)
Gerresheimer Zaragoza S.A., Spain (Deputy Chairman)
Gerresheimer Plasticos Sao Paulo Ltda., Brazil
Gerresheimer Boleslawiec S.A., Poland (Chairman)
Sensile Medical AG, Switzerland (Chairman) (since August 8, 2018)
Triveni Polymers Pvt. Ltd., India
Centor US Holding Inc., USA (Chairman)
Centor Inc., USA (Chairman)
Centor Pharma Inc., USA (Chairman)
MANAGEMENT BOARDFinancial year 2018
Dietmar Siemssen (since November 1, 2018)
Chairman of the Management Board
a) BFC Fahrzeugteile GmbH
Rainer Beaujean
Speaker of the Management Board
(from February 5, 2018 until October 31, 2018)
a) Gerresheimer Tettau GmbH (Deputy Chairman)
Gerresheimer Regensburg GmbH (Deputy Chairman)
Gerresheimer Bünde GmbH (Deputy Chairman) (since April 16, 2018)
b) Gerresheimer Glass Inc., USA (Chairman)
Corning Pharmaceutical Packaging LLC, USA (Chairman)
(since February 10, 2018)
Gerresheimer Momignies S.A., Belgium (until February 15, 2018)
Sensile Medical AG, Switzerland (since August 8, 2018)
Kimble Chase Holding LLC, USA (Chairman)
Centor US Holding Inc., USA
Centor Inc., USA
Centor Pharma Inc., USA
Dr. Christian Fischer (until February 5, 2018)
Chairman of the Management Board
a) Gerresheimer Tettau GmbH (Chairman) (until February 9, 2018)
Gerresheimer Regensburg GmbH (Chairman) (until February 9, 2018)
b) Gerresheimer Glass Inc., USA (Chairman) (until February 10, 2018)
Gerresheimer Queretaro S.A., Mexico (Chairman)
(until February 9, 2018)
Gerresheimer Shuangfeng Pharmaceutical Glass (Danyang)
Co. Ltd., China (Chairman) (until February 10, 2018)
Gerresheimer Shuangfeng Pharmaceutical Packaging (Zhenjiang)
Co. Ltd., China (Chairman) (until February 10, 2018)
Corning Pharmaceutical Packaging LLC, USA (until February 10, 2018)
a) Membership in Supervisory Boards according to German legal regulations b) Membership in comparable domestic and foreign control boards of economic enterprises
168 Gerresheimer AG ANNUAL REP ORT 2018gerreSHeiMer ag LoC at ionS
Headquarters
PLASTICS & DEVICESAnapolis, Brazil
Berlin, USA
Boleslawiec, Poland
Buenos Aires, Argentina
Buende, Germany
Changzhou, China
Dongguan City, China
Haarby, Denmark
Horsovsky Tyn, Czech Republic
Indaiatuba, Brazil
Kundli, India
Kuessnacht, Switzerland
Muenster, Germany
New Delhi, India
Peachtree City, USA
Perrysburg, USA
Pfreimd, Germany
Regensburg, Germany
Sao Paulo Butanta, Brazil
Sao Paulo Cotia, Brazil
Sao Paulo Embu, Brazil
Singapore, Singapore
Vaerloese, Denmark
Wackersdorf, Germany
Zaragoza, Spain
PRIMARY PACKAGING GLASSBoleslawiec, Poland
Chalon, France
Chicago Heights, USA
Danyang I, China
Danyang II, China
Essen, Germany
Kosamba I, India
Kosamba II, India
Lohr, Germany
Momignies, Belgium
Morganton, USA
Mumbai, India
Queretaro, Mexico
Tettau, Germany
Vineland, USA
Vineland Crystal Avenue, USA
Vineland Forest Grove, USA
Wertheim, Germany
Zhenjiang, China
LOCATIONS
GERRESHEIMER AG LOCATIONS
169gerreSHeiMer ag LoC at ionS
ADVANCED TECHNOLOGIESOlten, Switzerland
HEADQUARTERS
Duesseldorf, Germany (Gerresheimer AG) As of November 30, 2018
170 Gerresheimer AG ANNUAL REP ORT 2018produC t overvie W By di v i S ion
PRODUCT OVERVIEW BY DIVISION
DRUG DELIVERY SYSTEMSDrug delivery systems transport drugs simply and rapidly into
the body. They include plastic systems such as inhalers, pen
systems and injection systems.
PREFILLABLE SYRINGE SYSTEMSPrefillable syringe systems made of glass and COP (cyclic olefin
polymer) are supplied to customers in the pharmaceutical and
biotech industry for filling with drugs. Gerresheimer offers
a widely diversified range of sterile and non-sterile syringe
systems. Gx RTF® (ready-to-fill) and Gx RTF® ClearJect® syringe
systems are delivered to the customer washed, siliconized,
assembled with a closure cap and sterilized, i.e., completely
ready to fill.
MEDICAL TECHNOLOGY PRODUCTSGerresheimer produces disposables for various analysis systems
in laboratories and medical practices, quick tests for patients
in medical practices or hospitals, skin-prick aids and lancets for
diabetics, disposables and components for dialysis machines,
catheters and surgical devices made of plastic.
CONTAINERS FOR SOLID DOSAGEFor non-liquid forms of delivery such as tablets and powder,
Gerresheimer offers a wide spectrum of high-quality, user-
friendly products which are complemented by a multifaceted
range of alternatives in terms of specific closures, tamper-
evident closures and other design options.
CONTAINERS FOR LIQUID DOSAGEFor liquid applications in the field of pharma and healthcare,
Gerresheimer has a host of container types made of PET,
PE and PP in its range. Numerous system accessories allow
individual tailoring to the customer’s needs.
CONTAINERS FOR OPHTHALMIC AND RHINOLOGICAL APPLICATIONSGerresheimer also produces special plastic-based vials for eye
drops and nasal sprays. These user-friendly containers, which
can be complemented by different drop, spray or pump system
components, facilitate precise drug dosage and application.
CONTAINERS FOR PARENTERAL APPLICATIONS: MULTISHELL® PLASTIC VIALSDue to the triple-layer structure (COP/PA/COP), these Gerres-
heimer vials (2 – 100 ml) have oxygen barrier properties which
are unique for plastic vials. These vials are manufactured out of
heavy-metal-free polymers, are transparent and biocompatible,
and are particularly suitable for sensitive parenteral medicines.
They are also available in monolayer COP.
CONTAINERS FOR ORAL PRESCRIPTION MEDICATIONGerresheimer company Centor supplies a portfolio of plastic
packaging and closures for oral prescription medication in the
North American end-consumer market. The precise amount of
oral medication stated in a prescription is specially packaged
by the pharmacist in a plastic container for each patient.
Centor’s 1-Clic® and Screw-Loc® product lines are the two
leading forms of plastic packaging in the USA.
CONTAINERS FOR COSMETICSGerresheimer’s portfolio of innovative plastic packaging
encompasses a wide variety of standard shapes and sizes
as well as customer-specific packaging in accordance with
individual requirements. Gerresheimer deploys the latest tech-
nologies to provide custom finishing and decorating options
for our top-quality skin-care and hair-care packaging solutions.
PLASTICS & DEVICESThe product portfolio of the Plastics & Devices Division includes complex, customer-specific products for the simple and safe administration of medicines, such as insulin pens, inhalers and prefillable syringes. Also included are diagnostics and medical technology products such as skin-prick aids and test systems as well as pharmaceutical plastic containers for liquid and solid medicines with closure and safety systems.
171produC t overvie W By di v i S ion
PRIMARY PACKAGING GLASSThe Primary Packaging Glass Division produces glass primary packaging for medicines and cosmetics, such as pharma jars, ampoules, injection vials, cartridges, perfume flacons and cream jars.
AMPOULESAn ampoule is a sealed container made of tubular glass in standardized ISO types. In the case of
pharmaceutical ampoules, a distinction is made between various break-open methods such as the One
Point Cut, Color Break and Score Ring procedures.
CARTRIDGESThe cartridge is a glass cylinder which is closed at the front end by an aluminum cap with a membrane
which is penetrated by an injection needle for the actual injection. The rear end of the cartridge is closed
by a rubber stopper. Cartridges are used primarily in dental medicine as a primary packaging form for
local anesthetics and, in diabetes therapy, for insulin pens.
VIALS FOR PHARMACEUTICALSVials (injection vials) are small-volume primary packaging containers made of tubular or molded glass.
The filling volume of vials for pharmaceutical applications ranges from 0.6 to 50 ml.
BOTTLES AND JARS FOR PHARMACEUTICALSGerresheimer supplies glass containers for pharmaceutical use in a wide variety of shapes and sizes.
These include syrup and dropper bottles, tablet jars, wide-neck jars as well as injection, infusion and
transfusion bottles.
FLACONS AND POTS FOR COSMETICSGerresheimer produces flacons, jars, samplers, vials and ampoules in the widest possible variety of
forms and finishes—for example, for fragrances, deodorants, care cosmetics and decorative cosmetics.
BOTTLES AND JARS FOR BEVERAGES AND FOODGerresheimer supplies customer-specific small-volume containers for spirits and food.
172 Gerresheimer AG ANNUAL REP ORT 2018produC t overvie W By di v i S ion
ADVANCED TECHNOLOGIESWith the acquisition of Swiss tech company Sensile Medical, we paved the way in 2018 for our third division: the development and manufacture of intelligent drug delivery systems.
In this division, we offer pharmaceutical and biotech companies drug delivery systems with state-of-the-art digital and electronic capabilities. Its portfolio currently comprises patented micro pumps, which are used to self-administer medication for diabetes or Parkinson's, for example.
DRUG DELIVERY PRODUCTSGerresheimer’s subsidiary Sensile Medical develops innovative drug delivery products and platforms
with digital and electronic capabilities for pharmaceutical and biotech customers. These are used to
self-administer liquid drugs for a wide variety of applications, e.g. by patients with diabetes or Parkinson’s.
173gLoSSary
1-Clic®
1-Clic® is the brand name of a well-known product line from our American
subsidiary Centor Inc. The semitransparent orange plastic containers with
white closures are used in pharmacies to package up prescription medication
in the quantity specified by a patient’s physician.
Ampoule
Sealed container made of tubular glass in three standardized ISO types
(B, C and D). Pharmaceutical ampoules feature different opening systems,
including One Point Cut (OPC), Color Break and Score Ring.
Autoinjector
Medical device for administering a single dose (injection) of a liquid drug.
Autoinjectors were mainly developed for self-administration by the patient.
The devices use prefilled syringes.
› Pen system
Backstop
The backstop is an ingenious addition to the Gerresheimer syringe range.
The plastic system component is clipped onto the finger flange of a glass
syringe. It narrows the top opening and stops the plunger head from being
pulled out of the syringe. The ergonomically shaped wings also enlarge the
finger flange for improved ease of use.
Baked-on siliconization
› Gx Baked-On RTF®
BioPack
In addition to conventional PE and PET packaging, Gerresheimer also supplies
new, environment-friendly plastic packaging for pharmaceutical and cosmetic
applications. One of the main feedstock sources for biomaterials is sugarcane.
“Green” PE and PET from sugarcane is 100% recyclable. BioPack products
have the same properties as conventional plastic containers and can be
produced on existing filling and packaging lines. Using biomaterials helps
reduce greenhouse gas emissions and so protects the environment.
Biopharmaceutics
Also known as biopharmaceutical drugs or biotech drugs. Drugs produced in
genetically modified organisms by means of biotechnology. Bio pharmaceutics
is one of the fastest-growing product categories in the pharma and biotech
industry.
Borosilicate glass
Glass with very high hydrolytic resistance thanks to its chemical makeup.
Its low alkali emission makes borosilicate glass well suited as a packaging
material for injectables.
› Hydrolytic resistance
Bulk syringes
Syringe barrels supplied to the customer in an unsterilized state. Washing,
siliconization, mounting of the closure cap/needle shield and sterilization
before filling is carried out by the pharma company.
Camera inspection systems
The quality of Gerresheimer products is monitored during and after
manufacture using in-process controls. Advanced inspection systems help
pick out defective items at an early stage with the aid of dedicated computer
technology and digital image processing.
Cartridge
Tubular glass cylinder closed at the front end by an aluminum cap with
a membrane that is penetrated by a pen needle to draw up the injection
solution.
Child-resistant closure
Closure that protects children from harm by making pharmaceutical
packaging hard for them to open. Opening these special closures requires
actions that (without instruction) are generally beyond the dexterity of a
child. They typically call for non-intuitive opening actions or a combination
of movements simultaneously or in sequence (e.g. press-and-turn caps).
Clean room
Room in which special air-handling processes and systems are used to control
particulate and microbial air quality. An integral feature of pharmaceutical
production technology, this is essential to the manufacture of numerous
drug delivery and primary packaging solutions.
ClearJect® TasPack® (COP syringe)
A brand of sterile prefillable plastic syringes from our Japanese partner
company Taisei Kako Co. Ltd. The syringes are made of cyclic olefin
polymer (COP), a special plastic with glass-like transparency. COP syringes
are especially well suited for demanding applications in cytostatics and
biopharmaceutics. Like Gx RTF® syringes, they are packaged sterile in nested
tub format (TasPack® Taisei Kako Sterile Packaging).
GLOSSARY
174 Gerresheimer AG ANNUAL REP ORT 2018gLoSSary
Cold end
The cold end refers to the final steps of the molded glass production process
from removal from the lehr to the packaging section. Once glass containers
come out of the lehr, at which point they have cooled to about 100°C, the
bottles and jars are quality controlled in ultra-modern testing systems. The
glass is then ready for finishing in a further process step. This involves a
wide variety of techniques (such as printing and engraving), after which,
following a final quality check, it is packaged, palleted and shipped out of
the glassworks.
COP syringe (ClearJect® TasPack®)
› ClearJect® TasPack®
Cytostatics
Cytostatics are natural or synthetic substances that inhibit cell growth. They
are notably used in cancer treatment (chemotherapy) and in some treatments
for autoimmune diseases.
Delamination
In the context of glass as a primary packaging material, delamination relates
to the appearance of glass flakes by spalling. Under certain conditions, glass
can be reactive and susceptible to surface disintegration. This loss of structural
integrity can result in the formation of glass lamellae that separate from the
surface. Numerous parameters involved in glass chemistry and production
can contribute to delamination. The flakes are not visible to the naked eye.
Diabetes care
Medical specialism covering diabetes diagnosis and therapy. In this business
field, Gerresheimer focuses on developing and producing highly innovative
lancets, skin-prick aids and insulin pen systems.
Diagnostic systems
Systems for analyzing organic liquids and materials outside the body (in
vitro). Such systems can analyze patient samples for specific parameters—in
many cases fully automatically.
Digital interface
Sensile Medical products offer interfaces for transferring data to an app or
protected clouds. Patients can be reminded to take their drugs or maintain
an electronic diary, for example. This allows doctors to monitor the drug
administration history. And frees patients of the need to keep handwritten
records.
Dropper bottle system
Special glass or plastic bottle system consisting of bottle, dropper and closure
for administering medication in drop form.
Drug delivery system
System to transport a drug’s active substance in various ways (by pulmonary
or nasal inhalation, through the skin, via the mucous membranes or orally) to
exactly where it is needed in the body. Examples: inhalers for the treatment
of respiratory disease and prefillable syringes for injection drugs.
Drug master file (DMF)
Document recording the (pharmaceutical) manufacturing process and drug
quality assurance system used for regulatory agencies (such as the FDA in
the USA or Health Canada in Canada). Drug master files enable producers
who are not the final distributor of a drug (such as the producer of the active
agent or primary packaging) to provide drug regulators with all necessary
information without passing on trade secrets to their business partners.
Duma®
The Duma® brand name encompasses a large variety of pharmaceutical
plastic primary packaging containers made by the Plastic Packaging Business
Unit. Duma® containers are primarily used for drugs in solid dosage forms
such as tablets and powders. The containers combine with a great variety
of closure systems for different applications and users.
Furnace
Used for the melting process in glass production. The raw materials are mixed
in batches and melted in the furnace at about 1,600°C. Gerresheimer’s
furnaces run 24 hours a day, 365 days a year.
175gLoSSary
Gx® ARMOR vials
The new Gx® ARMOR vials product line is designed for parenteral solutions
with aggressive active agents and specially equipped to prevent delamination.
Gx® ARMOR stands for Gerresheimer Advanced Risk Management and
Operational Response.
Gx Baked-On RTF®
Gx Baked-On RTF® optimizes Gx RTF® syringes for silicone oil-sensitive bio-
tech drugs. This Gerresheimer process is patented in Europe and the USA.
Baked-on siliconization permanently fixes the silicone oil to the glass surface
and significantly reduces the number of free oil droplets.
Gx® Elite Glass
The Gx® Elite Glass product family made of type I borosilicate glass was
developed for pharmaceutical vials in highly demanding applications.
Gx® Elite Glass vials are two to three times as robust as conventional type I
glass, and are also significantly more break-resistant on the filling line and in
lyophilization. They exceed industry standards in cosmetic and dimensional
terms.
Gx® ETF vials
Gerresheimer provides easy-to-fill (ETF) vials for use by pharma customers
primarily in the US market. Gx® ETF vials are made of type 1 borosilicate glass
tubing, washed and sterilized, packed in compatible tubs and sealed. As an
option, they can additionally be sterilized with ethylene oxide. Customers
only have to open the tubs and place them on the filling line.
Gx® FLASH
Gx® FLASH is a proprietary Gerresheimer test procedure to predict the
susceptibility of vials to delamination. Specific thresholds in the production
process are continuously monitored. Vials are randomly sampled at regular
intervals and tested for susceptibility to delamination.
Gx® G3 inspection system
The Gx® G3 inspection system is the latest (third) generation inspection
system for tubular glass products. In syringe production, the system allows
all parts of the glass body to be cosmetically inspected in extremely high
resolution. The system also offers highly accurate inspection of product
geometry.
Gx InnoSafe®
With their exposed needles, used syringes are an ever-present hazard at
doctors’ practices, laboratories and hospitals. Gx InnoSafe® is a syringe
provided by Gerresheimer with an integrated passive safety system that
avoids inadvertent needleprick injuries, precludes reuse and is optimized
both for pharma industry production workflows and for easy and intuitive
use by medical personnel.
Gx® RHOC
Gx® RHOC is a proprietary Gerresheimer camera system offering superior
dimensional quality. The system consists of three high-resolution matrix
cameras on each side plus a hyper-centric ID camera. Further features include
integration with the forming machine and Infinity SPC software.
Gx RTF® ClearJect®
Brand name of the first COP (cyclic olefin polymer) plastic syringe made by
Gerresheimer in Europe. The new Gx RTF® ClearJect® syringe with cannula
offers key advantages with regard to the primary packaging of demanding
medications, notably when it comes to biocompatibility. The COP material
does not release metal ions into the drug solution. Since the entire manu-
facturing procedure for the syringe, including insert-molding the cannula,
is accomplished in a single step, the product is also free of tungsten and
adhesives. COP has high pH tolerance and, unlike glass, does not cause a
pH shift during storage. It is an exceptionally inert, break-resistant material,
making it well suited for packaging sensitive or toxic agents. Its higher
elasticity in comparison with similar materials gives syringes made of COP
greater mechanical resilience.
Gx RTF® syringe systems
The letters RTF in Gerresheimer’s Gx RTF® syringe brand stand for “ready-
to-fill”. Gx RTF® syringe systems are delivered to the customer washed,
siliconized, assembled with the closure cap, packed in nests and tubs, and
sterilized—completely ready to fill, as the name suggests. This cuts out a
whole chain of elaborate process steps for pharma manufacturers. Customers
can therefore start filling injectables straightaway, saving a lot of time and
money in the process.
176 Gerresheimer AG ANNUAL REP ORT 2018gLoSSary
Gx® RTF vials
The new Gx® RTF vials with the recognized Ompi EZ-fill® packaging techno-
logy combine the two Gerresheimer core competencies of molding vials from
glass tubing and the ready-to-fill process for prefillable syringes. Gx® RTF vials
are washed, packed in trays or nest and tub, sterilized and shipped to
pharma customers who can then start filling straightaway without any
additional process steps.
Gx Tekion®
Gx Tekion® is a system developed by Gerresheimer for cleaning glass tubes
with ionized air.
Gx TELC® (Tamper Evident Luerlock Closure)
Tamper-evident closure system developed by Gerresheimer for prefilled
syringes. The system combines a Luerlock adapter with a tamper-evident
closure.
Gx® THOR (Thermal Hydrolytic Optimization and Reduction)
Gx® THOR is a new Gerresheimer technology to reduce delamination
susceptibility in vials. The technology is integrated into existing forming
lines. Gx® THOR links critical areas of the converting process and guarantees
that 100% of vials are controlled to optimum temperature forming profile.
Specified acceptance thresholds are monitored using statistical process
control.
Hot end
The hot end refers to the first steps of the molded glass production process
from the furnace to the lehr. Material is melted in the furnace at approxi-
mately 1,600°C and then enters the feeder. Here, the glass is brought to the
desired temperature and the glass gob formed. The glass gob—exact to the
gram—then drops into the molding machine, where the glass container takes
shape. Fully formed and scorching hot, the containers are transported on a
conveyor belt to the lehr, where they are cooled at a specified rate so that the
glass retains no residual tension that could lead to spontaneous breakage.
Hydrolytic resistance
The resistance of glass to the leaching of alkali ions from the glass surface,
and the parameter used to grade glass into hydrolytic classes.
Infusion pump
The infusion pumps made by Gerresheimer’s subsidiary Sensile Medical,
which are based on micro pump technology, are worn off-body and can be
attached to a belt or stored in a small bag, for example. The liquid drug is
injected with a standard infusion set. More and more patients who depend
on a daily infusion are wearing pumps this way.
› SenseCore micro pump
Inhaler
Device used in the treatment of asthma, bronchitis and other chronic or acute
respiratory ailments. It transports aerosol and powder-based medications
into the upper and lower respiratory tracts.
Injection vial
› Vial
Inner surface treatment
Special surfacing process for the inside of a pharmaceutical container, e.g.
to ensure compatibility with the medication.
Insulin pen
An insulin pen is a special injection system for safe and near-painless delivery
of insulin from a cartridge.
Integrated moisture absorber
A moisture absorber protects medication from the effects of moisture during
storage and absorbs atmospheric humidity entering the container as a result
of it being repeatedly opened. Gerresheimer integrates the desiccant in a
capsule affixed to the inside of the Duma® Twist-Off cap.
Lancet
Plastic-coated blood-sampling needle for insertion into a skin-prick aid for
diabetic patients.
177gLoSSary
Metal-free syringe
Especially for drugs based on biotech products, prefillable syringes are needed
that preclude the possibility of contamination with tungsten or other metals.
For the new metal-free 1 ml long Gx RTF® Luerlock syringe, the pin used to
shape the cone is therefore made of a special ceramic material.
Moulded glass
Moulded glass packaging is produced in a single operation directly after
the melting process.
Molecular diagnostics
Molecular diagnostics refers to analysis methods based on examination of
genetic material (DNA or RNA). These allow more precise information to
be obtained than with traditional diagnostic procedures so that illnesses
can be detected faster.
Multifunctional closure system
Gerresheimer closures feature secure, air-tight opening and closure systems
to meet varied requirements. All caps conform to ISO standards and can
be combined with our glass and plastic packaging containers for liquids
and solids. The multifunctional closures are tamper-evident, child-resistant,
senior-citizen-friendly and moisture-absorbing.
MultiShell® plastic vials
These primary packaging vials are made from cyclic olefin polymer (COP)
and polyamide (PA). MultiShell® plastic vials are glass-clear, break-resistant
and biocompatible, making them especially well suited to long-term storage
of sensitive parenteral medicines. A new development, Gerresheimer’s
MultiShell® combines two COP outer layers with a middle layer of polyamide
for improved barrier properties against gas permeation compared with vials
made of COP alone.
Needle safety system
› Gx InnoSafe®
Lancet magazine
Magazine with integrated lancets in a drum housing.
Laser coding
In the new laser coding process for syringes, a tiny data matrix code uniquely
identifying the respective packaging container’s type and origin is indelibly
laser-etched onto the finger flange. In this way, Gerresheimer offers an
innovative track-and-trace solution for pharma containers and helps combat
drug counterfeiting.
Luer system (luer lock/luer cone)
The luer system is a connector system, standardized under the DIN EN
ISO 80369 standards series, for syringes, cannulas and various medical
tube systems. A seal is achieved in the luer system by the tapered design of
the connecting parts, known as the luer cone. The inner cone of the one
connector end is referred to as female and the outer cone of its counterpart
as male. On Gx RTF® syringes, the female part is made of glass and is integral
to the syringe barrel. Where the connection to the female cone is secured
with an inside thread, the system is referred to as a luer lock. The connection
is made and undone with a half-turn and cannot be released inadvertently.
Manufacturing execution system
A manufacturing execution system (MES) makes the oversight, manage-
ment and monitoring of production possible in real time. The focus is on
data exchange among all production stages and on improving information
flows during manufacturing. Defects, machine failures, line malfunctions
and the like are automatically captured or simply entered into the MES.
Everyone else involved is instantly informed without delay. Systematic error
capture can boost quality and productivity. Gerresheimer is already using
its second-generation MES. In order to make the MES easier to operate,
its user interface was developed in collaboration with the key users from
various departments and adapted to their needs.
178 Gerresheimer AG ANNUAL REP ORT 2018gLoSSary
Needle shield
Syringe part made of a pharmaceutical rubber compound that is placed over
the taper to protect the needle and stopper the front end of the syringe.
Nest
A nest is a packaging unit for vials, syringes and cartridges that ensures there
is no glass-to-glass contact. Nests are positioned in a tub. The new prefillable
Gx® RTF vials, for example, are washed, sterilized and then packaged in nests
and tubs (or alternatively in trays) for shipment. This prevents breakage
and safeguards the high cosmetic quality of the vials. The nest and tub
arrangement is suitable for direct filling and closure of the vials while still
positioned in the nest (as with Gx RTF® syringes).
Ophthalmology
The medical field of ophthalmology deals with eye and sight diseases as
well as malfunctions and their medical treatment.
Paste mold technology
Glass-forming (blowing) process using a rotating mold to produce a round
and seamless piece of glassware.
Patch pump
The patch pumps made by Gerresheimer’s subsidiary Sensile Medical, which
are based on micro pump technology, adhere directly to the skin. One
example of their use is with diabetes patients, for whom the doctor initially
sets the pump according to the specific therapy. The patient then attaches
the pump to his or her stomach or upper arm with an adhesive patch. When
the pump starts, the needle integrated into the device is automatically
inserted and remains in place for several days. This means patients can get
their insulin without daily injections.
› SenseCore micro pump
Pen system
A pen system is used to administer medication in multiple doses. Unlike
autoinjectors (which are non-reusable), pen systems are mostly used multiple
times. A pen system contains a prefilled cartridge as the primary packaging.
› Insulin pen system
PharmaPlus
PharmaPlus is a range of high-caliber technical solutions in glass forming for
unprecedented levels of precision. This includes the production of borosilicate
glass tubes, which Gerresheimer itself manufactures as an intermediary
product. The subsequent forming processes likewise produce an excellent
new standard of quality in primary packaging, for syringes, cartridges, vials
and ampoules alike.
Plastic systems
Complex and technically sophisticated assemblies made of multiple plastic
components.
Plunger (head)/rubber stopper
Syringe part made of a pharmaceutical rubber compound that closes the
syringe end after filling.
Plunger rod
Syringe part that is threaded or clipped onto the plunger head. For an
injection, the user’s thumb pushes down on the plunger rod to move the
plunger and empty the syringe.
Pour-and-count system
The pour-and-count system is the usual way of selling prescription medicines
in the USA and Canada and contrasts with the standardized pack units
sold in Europe. In the pour-and-count system, drug producers package
large quantities (100 to 1,000 units) of tablets and capsules in containers
delivered to pharmacies by drug wholesalers on demand. The pharmacist
pours tablets or capsules from the containers and counts out the precise
quantity stipulated in the prescription. The tablets or capsules are dispensed
in special plastic containers such as those provided by our American subsidiary
Centor, with a customer-specific label (in many cases both the dispensing
and labeling process are automated).
gLoSSary 179
Prefillable syringe systems
Prefillable syringe systems in the form of Gx RTF® and Gx RTF® ClearJect®
syringes are supplied sterile to customers in the pharma and biotech industry.
They are ready to be filled with liquid medication and sealed on accredited
production lines.
› Gx RTF® syringe systems
Primary packaging
Packaging that is in direct contact with medication, cosmetic and food
products.
Safe Pack
Pharmaceutical packaging is subject to stringent requirements and must
be kept free of germs and particles. The hygienic Safe Pack ensures that
sterile containers produced in the high-temperature process arrive at the
filler free of contamination. Pharmaceutical containers are vacuum-packed
and hermetically sealed in compliance with the most stringent certified
hygiene requirements.
Screw-Loc®
Screw-Loc® is the brand name of a well-known product line from our
American subsidiary Centor Inc. The semitransparent orange plastic
containers with white closures are used in pharmacies to package up
prescription medication in the quantity specified by a patient’s physician.
SenseCore micro pump
SenseCore technology is based on the innovative, patented micro rotary
piston pump developed by Gerresheimer’s subsidiary Sensile Medical.
SenseCore is small, enables very precise dosage and consists of only two
plastic parts. Compatible with various liquid drugs, this micro pump is at
the heart of Sensile Medical’s range of pump platforms. Due to their ability
to be operated by patients themselves, these devices improve the lives
of people who depend on injection aids. The devices are adjusted to the
patients’ illness-related complaints, thus ensuring simple, reliable operation.
Siliconization
Silicone oil is used as a glide agent in the inner surface treatment of pharma-
ceutical containers. This makes it easier for the plunger to slide along the
syringe barrel—an essential feature in a properly functioning syringe system.
› Gx Baked-On RTF®
Skin-prick aid
Device for diabetics allowing a lancet to be inserted near-painlessly into
the skin. Some models allow for different penetration depths to cater for
variations in skin thickness.
Tamper-evident closure
A tamper-evident closure reliably signals that a pharmaceutical container
has been previously opened. This means physicians, nurses and patients
know if a drug has been used without authorization. Gerresheimer’s Duma®
Twist-Off tamper-evident screw caps for tablet bottles have a ring on the
cap that is detached by the twisting action when the container is first
opened. The pieces of plastic connecting the ring to the cap are torn off
in the process, clearly indicating that the product has been opened before.
Likewise, the tamper-evident closure for Gerresheimer syringe systems with
Luerlock adapter is activated by twisting. The twist action causes the tabs
on the twist-off closure (Gx TELC®) to spread out, showing that the syringe
has been previously opened.
TCC
Technical Competence Center, where products and systems are developed
and made ready for series production in collaboration with the customer.
TE ring (tamper-evident ring)
› Tamper-evident closure
Tip cap
Syringe part made of a pharmaceutical rubber compound that is placed
over the taper to stopper the front end of the syringe.
180 Gerresheimer AG ANNUAL REP ORT 2018gLoSSary
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TPE (Thermoplastic Elastomer)
Plastic with thermoplastic properties, behaving like a classical elastomer at
room temperatures but allowing its shape to be modified when heated.
Tray
A tray is a packaging unit for vials, syringes and cartridges that ensures there
is no glass-to-glass contact. The new prefillable Gx® RTF vials, for example,
are washed, sterilized and then packaged in trays (or alternatively in nests
and tubs) for shipment. This prevents breakage and safeguards the high
cosmetic quality of the vials. Trays are generally used for manual filling in the
case of small quantities for laboratory use, or conventionally in large-volume
fill lines where the vials are taken out and separated beforehand.
Tub
› Nest
Tubular glass
Tubular glass involves two separate processes: first, the production of glass
tubes and, second, the manufacture from those tubes of primary packaging
such as syringes, cartridges, ampoules and vials.
Type I borosilicate glass
High-quality type I borosilicate glass has the highest-possible hydrolytic
resistance due to its chemical composition. Its low alkali emissions make
borosilicate glass well suited as a packaging material for injectables.
Ampoules, cartridges, vials and syringe barrels are the main products for
which chemically highly resistant type I borosilicate glass is the preferred
material.
Type II glass
Type II glass is a soda-lime-silica glass that has been de-alkalized. This
treatment gives type II glass very high hydrolytic resistance, making it suitable
for acid and neutral aqueous parenterals.
Type III glass
Type III glass is a soda-lime-silica glass with medium hydrolytic resistance. This
type of glass is suitable for all other liquid as well as for solid preparations.
It is used for products such as cough syrups and tablets.
Vial
A small-volume primary packaging container made of tubular glass.
Gerresheimer makes vials for pharmaceutical applications with filling volumes
ranging from 0.6 to 50 ml. Often referred to as an injection vial as the liquid
is drawn out with an injection needle (disposable syringe).
The definitions in this glossary apply in context as used by Gerresheimer
and are not intended as generally applicable definitions.
F inanCi aL C aLendar / iMprint U3
April 11, 2019 Interim Report 1st Quarter 2019
June 6, 2019 Annual General Meeting 2019
July 11, 2019 Interim Report 2nd Quarter 2019
October 10, 2019 Interim Report 3rd Quarter 2019
FINANCIAL CALENDAR
Publisher
Gerresheimer AG
Klaus-Bungert-Strasse 4
40468 Duesseldorf
Germany
Phone +49 211 6181-00
Fax +49 211 6181-295
E-mail info@ gerresheimer.com
www.gerresheimer.com
Concept and Layout
Kirchhoff Consult AG, Hamburg, Germany
Text
Gerresheimer AG, Duesseldorf, Germany
Photography
Claudia Kempf, Wuppertal, Germany
Daniel Gebauer, Willich, Germany
de-Agentur, Schwandorf, Germany
Frank Springer, Bielefeld, Germany
Gerresheimer, Duesseldorf, Germany
iStockphoto LP
Printing
Woeste Druck + Verlag GmbH & Co. KG, Essen, Germany
Note to the Annual ReportThis Annual Report is the English translation of the original German version; in case of deviations between these two, the German version prevails.
Note regarding the rounding of figuresDue to the commercial rounding of figures and percentages, small deviations may occur.
DisclaimerThis Annual Report contains certain future-oriented statements. Future-oriented statements include all statements which do not relate to historical facts and events and contain future-oriented expressions such as “believe”, “estimate”, “assume”, “expect”, “forecast”, “intend”, “could” or “should” or expressions of a similar kind. Such future-oriented statements are subject to risks and uncertainties since they relate to future events and are based on the Company’s current assumptions, which may not in the future take place or be fulfilled as expected. The Company points out that such future-oriented statements provide no guarantee for the future and that actual events including the financial position and profitability of the Gerresheimer Group and developments in the economic and regulatory fundamentals may vary substantially (particularly on the down side) from those explicitly or implicitly assumed or described in these statements. Even if the actual results for the Gerresheimer Group, including its financial position and profitability and the economic and regulatory fundamentals, are in accordance with such future-oriented statements in this Annual Report, no guarantee can be given that this will continue to be the case in the future.
IMPRINT
K3MuLt i -ye ar overvie W
Financial Year-end November 30 2018 2017Change
in %7) 2016 2015 2014 2013
Results of Operations during Reporting Period in EUR m
Revenues 1,367.7 1,348.3 1.4 1,375.5 1,282.911) 1,207.911) 1,185.311)
Adjusted EBITDA1) 298.6 310.8 -3.9 307.8 262.611) 241.011) 238.411)
in % of revenues 21.8 23.1 – 22.4 20.511) 20.011) 20.111)
Adjusted EBITA2) 202.1 219.5 -7.9 220.9 178.111) 155.111) 156.411)
in % of revenues 14.8 16.3 – 16.1 13.911) 12.811) 13.211)
Results of operations 139.5 180.8 -22.9 180.5 182.011) 120.711) 124.811)
Adjusted net income3) 180.3 130.0 38.7 130.49) 117.712) 97.912) 103.512)
Net Assets as of Reporting Date in EUR m
Total assets 2,730.9 2,444.1 11.7 2,374.3 2,419.4 1,655.9 1,615.8
Equity 890.1 789.5 12.7 763.3 698.1 604.4 563.4
Equity ratio in % 32.6 32.3 – 32.1 28.9 36.5 34.9
Net working capital 202.7 185.7 9.1 200.3 213.7 233.1 201.9
in % of revenues of the last twelve months 14.8 13.8 – 14.6 16.711) 19.411) 17.111)
Capital expenditure 114.7 118.6 -3.2 113.2 125.8 126.6 119.1
Net financial debt 886.4 712.7 24.4 788.2 877.5 423.8 416.6
Adjusted EBITDA leverage4) 3.1 2.3 – 2.6 2.9 1.7 1.7
Financial and Liquidity Position during Reporting Period in EUR m
Cash flow from operating activities 173.4 219.2 -20.8 173.5 203.8 158.3 146.7
Cash flow from investing activities -286.9 -112.1 > 100.0 7.9 -600.1 -125.0 -168.6
thereof: Cash paid for capital expenditure -114.6 -116.5 -1.7 -110.7 -125.8 -125.6 -119.0
Free cash flow before financing activities -113.5 107.1 > -100.0 181.3 -396.3 33.3 -21.9
Employees
Employees as of the reporting date 9,890 9,749 1.4 9,904 10,684 11,096 11,239
Stock Data
Number of shares at reporting date in million 31.4 31.4 – 31.4 31.4 31.4 31.4
Share price5) at reporting date in EUR 62.90 67.06 -6.2 68.85 73.90 44.44 49.67
Market capitalization at reporting date in EUR m 1,975.1 2,105.7 -6.2 2,161.9 2,320.5 1,395.4 1,559.6
Share price high5) during reporting period in EUR 79.80 78.01 2.3 76.86 76.32 56.42 50.14
Share price low5) during reporting period in EUR 59.75 61.03 -2.1 57.10 41.99 42.31 37.60
Earnings per share in EUR 4.11 3.21 28.0 3.87 3.32 2.11 1.98
Adjusted earnings per share6) in EUR 5.67 4.06 39.7 4.0710) 3.4112) 2.8912) 3.0812)
Dividend per share in EUR 1.158) 1.10 4.5 1.05 0.85 0.75 0.70
1) Adjusted EBITDA: Net income before income taxes, net finance expense, amortization of fair value adjustments, depreciation and amortization, impairment losses, restructuring expenses, and one-off income and expenses.
2) Adjusted EBITA: Net income before income taxes, net finance expense, amortization of fair value adjustments, impairment losses, restructuring expenses, and one-off income and expenses. 3) Adjusted net income: Net income before non-cash amortization of fair value adjustments, non-recurring effects of restructuring expenses, portfolio adjustments, the balance of one-off
income and expenses—including significant non-cash expenses—and related tax effects. 4) Adjusted EBITDA leverage: The relation of net financial debt to adjusted EBITDA of the last twelve months according to the credit agreement currently in place. 5) Xetra closing price. 6) Adjusted earnings per share after non-controlling interests divided by 31.4m shares. 7) Change calculated on a EUR k basis. 8) Proposed appropriation of retained earnings. 9) Adjusted net income from continuing operations.10) Adjusted earnings per share after non-controlling interests.11) Retrospective restatement due to the sale of the Life Science Research Division and related classification as discontinued operation.12) Including the Life Science Research Division sold in 2016.
MULTI-YEAR OVERVIEW
K4
Multi-Year OverviewFinancial Calendar
Checklist
di v i S ionS
DIVISIONS
› Primary Packaging Glass
The Primary Packaging Glass Division produces glass primary packaging for
medicines and cosmetics, such as pharma jars, ampoules, injection vials,
cartridges, perfume flacons and cream jars.
› Plastics & Devices
The product portfolio of the Plastics & Devices Division includes complex,
customer-specific products for the simple and safe administration of
medicines, such as insulin pens, inhalers and prefillable syringes. Also included
are diagnostics and medical technology products such as lancets and test
systems as well as pharmaceutical plastic containers for liquid and solid
medicines with closure and safety systems.
› Advanced Technologies (established as of June 30, 2018)
The Advanced Technologies Division develops and manufactures intelligent
drug delivery systems. The Swiss tech company Sensile Medical, which was
acquired in the financial year 2018, forms the basis of this division, which
offers pharmaceutical and biotech companies drug delivery systems with
state-of-the-art digital and electronic capabilities. Its portfolio currently
comprises patented micro pumps, which are used to self-administer
medication for diabetes or Parkinson’s disease, for example.
in eur m 2018 2017Change
in %4)
Revenues at constant exchange rates1), 2) 777.9 757.2 2.7
Revenues1) 751.3 757.2 -0.8
Adjusted EBITDA at constant exchange rates2), 3) 210.9 215.2 -2.0
Adjusted EBITDA3) 203.0 215.2 -5.7
in % of revenues 27.0 28.4 –
Capital expenditure 64.7 70.9 -8.7
in eur m 2018 2017Change
in %4)
Revenues at constant exchange rates1), 2) 12.9 – –
Revenues1) 12.9 – –
Adjusted EBITDA at constant exchange rates2), 3) 3.0 – –
Adjusted EBITDA3) 3.0 – –
in % of revenues 23.0 – –
Capital expenditure 0.5 – –
in eur m 2018 2017Change
in %4)
Revenues at constant exchange rates1), 2) 617.6 592.0 4.3
Revenues1) 605.2 592.0 2.2
Adjusted EBITDA at constant exchange rates2), 3) 116.2 116.0 0.3
Adjusted EBITDA3) 114.7 116.0 -1.1
in % of revenues 19.0 19.6 –
Capital expenditure 47.8 41.3 15.6
1) Revenues by division include intercompany revenues.2) Translated at budget rates 2018, which are equivalent to the average rates of the financial year 2017 and
can be found in Note (4) of the consolidated financial statements.3) Adjusted EBITDA: Net income before income taxes, net finance expense, amortization of fair value adjustments,
depreciation and amortization, impairment losses, restructuring expenses, and one-off income and expenses.4) The change has been calculated on a EUR k basis.
Multi-Year Overview